Palladium Spot $800 – As Gold and Silver Finds Bottom

Palladium Futures – Uncharted Territory

Most Hedge funds, which have returned just 3.3% to investors in 2014 have zero exposure to the price of Palladium in a meaningful way as a percentage to their assets under management.

So the question I would ask is “Why?”

Is it a precious metal? While Gold has backed off nearly 700 dollars per ounce from its high, Palladium has held solid as a rock, giving up just marginal gains and even making new highs. Most people only look at the prices of Gold and Silver. Bloomberg TV doesn’t even show the spot price of the metal, only Platinum.

Is it an energy play? Oil has lost almost half of its value as of recent. Palladium is consumed by industry and held in vaults like gold is. How much more rare is Palladium than Gold? Try to comment in the comments section of this article if you know the answer. Most people couldn’t even imagine something 20 or 30 more times rare selling at 60% of the price of something that is supposed to be a store of value and a protection against inflation.

Is it a technology play? As the NASDAQ plows through the 5000 level, Palladium closed at 832 dollars an ounce. You would almost assume it was correlated with the technology indices.

So there are several areas that overlap with the Palladium Investment Idea: Precious Metals, Energy, and Technology.

As the list of more than 1800 billionaires was released by Forbes at the beginning of the month, how many of them do you think have exposure to the precious metal? How many CTA’s actively trade or invest in the Palladium Futures Market? The answer is probably, “not many.” Maybe a few percent or a low single digit percentage will represent the exposure that they have to such a commodity.

If you are a high net worth individual, family office, hedge fund investor, precious metals investor, or large institutional investor, you might want to ask yourself why you do not have exposure to such an asset. Most CTA’s will not even be involved in this market. To properly gain the upside exposure to this market you will most likely want to have an investment professional who is good at hedging and using leverage in markets actively and with a long term horizon of the value and scope of the future pricing of the metal. One can make the argument that the spot price is not currently reflecting its true potential. If you consider the applications of the commodity in future technologies such as Low Energy Nuclear Reactions (LENR), you will realize that this is a market that you will want exposure in for 2015 and into the future.

While the minimum investment to handle such an endeavor is $1MM with a 20% incentive allocation and 1% management fee, I will be willing to take on smaller accounts at 100k 0% incentive allocation and just 1% management fee.

Six Years Since the Financial Crisis and Indices at Record Highs

As the markets are headed toward higher levels, volatility and speculation will certainly increase. Investors and high net individuals should look toward trading strategies and managers who have experience short-selling and specialize in profiting from these environments. While most short only funds are concentrated in very large capitalization companies, the astute investor should look toward more nimble and smaller firms or managers who can take advantage of these opportunities that will be presenting themselves more and more frequently.

Managed accounts are becoming an increasingly sizable part of the hedge fund arena, largely as a result of their inherent flexibility, strong operational oversight and the benefits of enhanced liquidity and greater transparency. Managed accounts do, however, require a significant change in approach from both the investor and the manager. Investors should be aware of the shift in responsibility on the operational side from the manager to them and the need to fully understand their requirements and their own capabilities, while managers may have to accept tighter controls around trading, liquidity and investment allocation placed upon them.

John Chalekson

Volatility and Short Selling Specialist

Managed Account Structure

Independent Trader/ Researcher

John Chalekson is 37 years old with 20 years of experience in equity markets. John Chalekson is an ex-hedge fund manager who started a fund at the age of 23 years old after success at multiplying several individual stock trading accounts up to 150 fold. John Chalekson specializes in shorter term swing trading as a short seller. He is currently open to handing new accounts in the Managed Account Structure, making decisions for the account holder with Power of Attorney. Individuals or Institutions who are Accredited or Qualified Investors may consult with Mr. Chalekson via Linkedin, Email, or Telephone.

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