by Doug Casey, Casey Research:

Editor’s note: Last week, we spoke with Casey Research founder Doug Casey about why he sees an explosive uptrend ahead for commodities. And regular readers know that he’s bullish on gold, in particular.

Gold has the potential to protect your wealth – even during this recent volatility – while still delivering big gains. But it’s not the only precious metal you should be keeping an eye on.

In today’s Conversations With Casey, Doug shares his outlook on three of his top metals that are undervalued…

Daily Dispatch: Continuing our discussion from last time, and thinking specifically of metals and energy, in terms of commodities, are there any that you think are more undervalued than others? The annual “Periodic Table of Commodity Returns,” produced by investment firm US Global Investors, notes that palladium has been the best-performing commodity over the past three years.

What’s your take on why the palladium price has done so well, and the reasons why some of the other commodity prices have gone down?

Doug Casey: Well, palladium, which is around $2,534 an ounce right now, historically was much cheaper than either platinum or gold. But it’s very useful as a catalyst in automotive technology. About 80% of supply is used in catalytic converters. Industries generally adopted palladium to use as a catalyst when it was cheap, as a substitute for platinum. Demand, and the price, went way up. In fact, there’s going to be a supply deficit of about 700,000 ounces of palladium in 2020.

So now, if anything, industries will have to retool and readopt platinum. The trouble is that both metals come from just two places in the world. Platinum mostly comes from South Africa, and secondarily from Russia. And palladium comes primarily from Russia, and secondarily from South Africa.

Neither is the most politically or economically stable place. South Africa, in particular, is a very unstable source for metals – the whole continent is. I’d say platinum is a very good speculation right now. It’s a good technological play and a very good political play. But that doesn’t mean the palladium price is about to fall. Who’s to say that it won’t go to $3,000 an ounce before platinum starts catching up? You can’t predict these things over the short run. There are dozens of important variables.

Daily Dispatch: Seeing as we’re on the subject of the precious metals, I’m sure our readers would love to hear your take on silver.

Doug Casey: With silver, it’s important to remember that there are very few standalone silver mines in the world, and even fewer that make money. Silver is primarily a byproduct of copper, lead, zinc, and gold production. Few pure silver mines exist.

It’s a very high-tech metal. Remember that silver is the most conductive and reflective of all metals. In a high-tech world, those superlatives mean there are new uses being developed for it every day. Actually, when you consider that over the last few decades it was taken out of the monetary system, and then out of photography, which used to consume most of it, the price has been surprisingly strong.

I’m a bull on silver partly because it’s a much smaller market than gold. With gold, basically all that’s ever been mined is still in existence aboveground, because its primary use is as money. There’s very little silver that’s kept in inventory, however. Even though about 10 times more is mined each year than gold – say 800 million ounces of silver – it’s only worth 10% as much.

It’s consumed the way copper, lead, zinc, nickel, and all the others are. There are some inventories of silver, but nothing remotely like gold. So I’m very bullish towards silver, possibly even more so than gold. And as history shows, when gold runs, silver goes wild.

Of course, people often make the mistake of thinking gold and silver are the same investment, as if “gold-and-silver” was one word and one metal. But they’re two entirely different metals, and two entirely different markets with different characteristics.

In short, I like them both, but for very different reasons.

Daily Dispatch: I see. Thanks for sharing your thoughts, Doug.

Doug Casey: You’re welcome.

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