I like to consider myself a contrarian investor. Zigging when others are zagging is usually the surest way to find underpriced stocks and avoid overheated ones that are due for a pullback.
But this time, the crowd just might be right.
As it turns out, analysts and investors have been singing the same tune -- at least when it comes to the outlook for a certain rare metal.
Let me explain...
Back in January, I made a bullish call on platinum in my Scarcity & Real Wealth advisory and pointed out a few reasons why it was likely to bounce in 2012. At the time, the metal was trading for $1,360 an ounce -- today, it sells for about $1,600 an ounce.
Meanwhile, the ETFS Physical Platinum Fund (NYSE: PPLT) has already climbed about 15% for the year.
So far, so good.
As a close sibling, palladium shares many of the same traits and uses, most notably as a key component in automobile catalytic converters. The main difference is that palladium has historically been favored in gasoline engines, whereas platinum is more common in diesel.
But diesel makers are increasingly turning to palladium because it's cheaper.
Global carmakers are widely expected to roll out 80 million vehicles this year. Those cars and trucks will leave the assembly lines with 6.24 million ounces of palladium -- 6% more than what was consumed last year and a new record high, according to Barclays Bank.
Where will the metal come from?
Russia's main mining giant is more concerned with nickel production (which accounts for 90% of sales). And South African producers have been plagued by energy shortages and labor disputes. The country's output is expected to be the thinnest in years.
This will likely be the sixth consecutive year of falling global mine production.
To cover the shortfall, palladium suppliers have been dipping into secondary, above-ground sources, namely a strategic stockpile in Russia. But this key source is running dry and may almost be depleted.