David Hay — Friday POW!: abrdn Physical Palladium Shares ETF (PALL) — "We are reiterating PALL as a Buy" after a 1/3 correction from the January 2026 apex just over $2,000/oz to ~$1,300 spot, on a double blindspot: 85-90% of palladium demand is automotive catalytic converters and PHEVs — the actual growth segment of the "EV market," 60%+ of Chinese monthly sales, BYD's PHEV export mix 11.6% → 37%, Chinese PHEV exports to Europe +700% YoY — carry full converters and often use MORE palladium than an ICE, while supply has been in deficit 14 consecutive years (0.9Moz 2023, 0.5Moz 2024), Lac des Iles ceased production mid-2026, recycling fell ~700koz as the US fleet aged to a record 12.6 years, and Nornickel (~40%) plus South Africa (~35%) control 75-80% of primary supply; Bessent's "twist the yield curve" is read as the definitive first step toward YCC and monetary debasement, making palladium both a quasi-monetary PGM and an industrial deficit; BofA Q4-2026 target ~$2,200/oz (~70% upside). SBSW watched but not endorsed after a 15% weekly rip (Aug 21 2026)

One-line take: a POW! that is structurally different from the last two — Aug-7's GILD and Aug-14's VST were new picks built on an accounting artifact; this one is a re-entry into a position Haymaker already made money on, triggered by price rather than by news. The trigger is stated as an equation. "We are coming back to it now because palladium has significantly corrected within what we believe is a long-term uptrend at the same time that the fundamental supply/demand story has strengthened. Additionally, the macro backdrop underpinning the hard-asset thesis has moved further in our direction, particularly the trend toward monetary debasement." Three independent conditions — cheaper price, better fundamentals, better macro — all moving the same way on a name whose original thesis is already proven. The macro. "We are entering what we believe is a new era of YCC. When central governments begin suppressing interest rates to manage sovereign debt costs (explicitly as Japan has done, implicitly as other OECD sovereigns are doing) the monetary debasement implications for real assets are profound." The dated catalyst is Bessent's "high-profile announcement this week to 'twist the yield curve', by selling short-term Treasuries to buy longer term issues," which "ignited a roaring rally in the hard-asset space, as you likely noticed (a happy event for Haymaker followers). The market reasonably believes this is a definitive first step toward YCC." And the reason to reach past gold: "precious metals are the obvious beneficiary, but industrial metals also benefit as hard assets, often with highly favorable supply-demand characteristics of their own. Palladium is a special case because it qualifies as both a quasi-monetary asset (part of the PGM complex) and it has industrial supply-demand dynamics that are separately compelling." The demand blindspot. The whole pick rests on a definitional error the market has not corrected: "the consensus assumed the internal combustion engine-to-EV transition would be binary and swift. What has actually happened is that hybrids (particularly plug-in hybrids) have become the dominant growth segment of the global 'EV market,' and these vehicles actually use catalytic converters, requiring Pd. Critically, plug-in hybrids require palladium at rates comparable to conventional gasoline vehicles. Actually, they often consume more." The error is propagated by the data itself — "the perception of the EV risk has proven durable, exacerbated by the confusing manner in which many sources report EV sales by including plug-in hybrids in the total." The evidence is Chinese and recent. NEVs, "led heavily by PHEVs, surpassed 60% of monthly auto sales in 2026"; BYD, "the world's largest auto exporter," saw PHEVs grow "from 11.6% to over 37% of its total export mix"; "Chinese PHEV exports to Europe grew more than 700% year-over-year, with Spain, the UK, and Belgium each posting volume increases of multi-hundred to over 1,000%," plus comparable growth in "the UAE, Southeast Asia, and South America." Three named drivers: "range anxiety in markets where charging infrastructure remains incomplete"; "EU anti-subsidy tariffs on Chinese BEVs (PHEVs are exempt) that make PHEVs the price-competitive alternative while BYD builds factories in Hungary and Turkey"; and "platforms like BYD's DM 5.0, which delivers over 2,000 km (about 1,200 miles) of combined range." Two accelerants are added — the Iran War ("spiking oil prices and energy supply uncertainty have pushed consumers toward PHEVs… They also provide a hedge against grid failures") and the FT datapoint that "21% TSLA owners are trading in their 'Musk-mobiles' for hybrids." The supply side is the part he says is being missed outright. "Global Pd supply has been in a persistent deficit for 14 consecutive years. The 2023 deficit was 0.9 million ounces; 2024 was 0.5 million ounces. An expected 2026 surplus has been repeatedly pushed back as supply tightens." Three separate tightenings: the Lac des Iles mine in Ontario ceased commercial production mid-2026, "removing one of the few significant non-Russian, non-South African sources"; recycling has shrunk rather than grown — "U.S. vehicles now average a record 12.6 years as owners delay scrappage, and recycling supply fell approximately 700,000 ounces between 2022 and 2024, about 25% of total reprocessed availability and around 10% of total palladium supply"; and the geography is two politically-charged countries, "Russia's Nornickel… approximately 40% of global primary supply" and "South Africa… approximately 35%." The unpriced tail: "Western sanctions have thus far exempted palladium under automotive industry lobbying pressure, but Montana lawmakers are actively pushing the White House for harsher restrictions. Any escalation would be an acute supply shock not remotely priced into the current $1,300 spot price." The technicals are used as confirmation, not as the argument. Pd "essentially doubled in 2025," then "entered a deep corrective phase" that "undoubtedly has shaken out most of those who simply chased the momentum" — "sell-offs of this magnitude are common with metals and they tend to drive out the hot money, creating opportunities for those who are taking the long-term view." The scorecard is honest in both directions: "Pd has held around its initial breakout point from last year; the less upbeat aspect is that it remains well below its 200-day moving average… However, the steep downtrend it's been in for most of 2025 has been broken." Arguing the other side is unusually candid: "if you've been a palladium bull over the last few years, there's a pretty good chance you've been burned, as in third-degree burned" — $3,430 in March 2022, then "collapsed approximately 70% as worst-case Russia sanctions failed to materialize and the EV bear narrative returned"; European ICE bans in the 2030s (doubted "for practical reasons; ICEs still represent around 95% of the existing global vehicle fleet"); and platinum-for-palladium substitution — "at higher palladium prices, automakers have economic incentive to reformulate catalyst systems toward platinum, and they have done so previously. At the current palladium/platinum ratio of approximately 0.70x the pressure is limited, but a strong recovery could reintroduce it." The verdict. "We're buying a physically scarce metal in persistent deficit since 2012, produced predominantly in two politically charged geographies, and with a demand structure the consensus has systematically underestimated. We're adding to the position at a price 1/3 below its February highs… it seems to us that the market has a double blindspot regarding palladium. PALL, the physically backed ETF, has no counterparty risk, and is a convenient way to hold this key metal… the EV transition is moving through hybrids, not past them, and palladium supply is not growing to meet it. We are reiterating PALL as a Buy." The footnote is the discipline. The write-up of SBSW — flagged in May 2024 as "a high-risk play on this critical metal," profit-taken "last December" — was pulled: "as we were preparing to write this note, it began a ripping rally and is now up 15% this week alone. We will keep an eye on it and advise if it settles back." The intended endorsement was withdrawn purely because the price moved before publication. Dating note: the metal's apex is given as "January 2026" in the Key Highlights and "February highs" in the technical and closing sections — the same top, described two ways.

1. Stocks & names mentioned

Ticker	Name	Research	View	What he said	At
PALL	abrdn Physical Palladium Shares ETF	QT · SA · STK	Positive	The week's pick, and a reiteration rather than an initiation — "We are reiterating PALL as a Buy," restating "our original recommendation… of PALL, the palladium ETF, in April 2024," whose thesis "was contrarian and it has returned to out-of-favor status today." The trigger is a three-part alignment: "palladium has significantly corrected within what we believe is a long-term uptrend at the same time that the fundamental supply/demand story has strengthened," while "the macro backdrop underpinning the hard-asset thesis has moved further in our direction, particularly the trend toward monetary debasement." The entry is a 1/3 correction from the January 2026 apex of just over $2,000/ounce to ~$1,300 spot; the sell-side marker is a BofA Q4-2026 target of ~$2,200/oz, "implying ~70% upside from spot," with a base case "for flat to roughly a 23% gain." Macro: "we are entering what we believe is a new era of YCC… when central governments begin suppressing interest rates to manage sovereign debt costs (explicitly as Japan has done, implicitly as other OECD sovereigns are doing) the monetary debasement implications for real assets are profound" — with Bessent's "twist the yield curve" announcement having "ignited a roaring rally in the hard-asset space," read as "a definitive first step toward YCC." Palladium is "a special case" because it is both a quasi-monetary PGM asset and an industrially-deficit metal. Demand: "85-90% of global palladium demand is from automotive catalytic converters; ICE and hybrid vehicles require palladium; 'pure' BEVs do not," and the consensus wrongly "assumed the internal combustion engine-to-EV transition would be binary and swift" — instead PHEVs became "the dominant growth segment," using palladium "at rates comparable to conventional gasoline vehicles. Actually, they often consume more." Evidence: Chinese NEVs past 60% of monthly sales in 2026, BYD's PHEV export mix 11.6% → over 37%, Chinese PHEV exports to Europe +700% YoY, driven by range anxiety, an EU anti-subsidy tariff that exempts PHEVs, and DM 5.0-class range; accelerated by the Iran War and by Tesla owners switching ("21% TSLA owners are trading in their 'Musk-mobiles' for hybrids"). Supply: "a persistent deficit for 14 consecutive years" — 0.9Moz (2023), 0.5Moz (2024) — the expected 2026 surplus "repeatedly pushed back," Lac des Iles ceasing production mid-2026 (one of the few non-Russian/non-South-African sources), recycling down ~700,000 oz between 2022 and 2024 (~10% of total supply) as the US fleet aged to a record 12.6 years, and Nornickel ~40% + South Africa ~35% of primary supply with a sanctions tail ("Montana lawmakers are actively pushing the White House for harsher restrictions… an acute supply shock not remotely priced into the current $1,300 spot price"). Technically, Pd "has held around its initial breakout point," is still "well below its 200-day moving average," but "the steep downtrend… has been broken" — and the sell-off "tends to drive out the hot money." Risks argued: the $3,430 March-2022 peak then a ~70% collapse ("third-degree burned"), European ICE bans in the 2030s (doubted — "ICEs still represent around 95% of the existing global vehicle fleet"), and platinum substitution, "limited" at the current Pd/Pt ratio of ~0.70×. Verdict: "We're adding to the position… PALL, the physically backed ETF, has no counterparty risk, and is a convenient way to hold this key metal… We are reiterating PALL as a Buy."	read ↗
SBSW	Sibanye Stillwater	QT · SA · STK · FA	Neutral	The endorsement that was written and then pulled by the tape — the closing footnote is the whole entry: "We were intending to include an endorsement of the world's largest palladium producer, SBSW, which we previously brought to your attention as a high-risk play on this critical metal in May 2024. (We suggested profit-taking on it last December.) However, as we were preparing to write this note, it began a ripping rally and is now up 15% this week alone. We will keep an eye on it and advise if it settles back." So: the operating leverage on the same palladium thesis is acknowledged (it is the equity expression of the PALL call, and the world's largest producer of the metal), the prior round-trip is on the record, and the current stance is explicitly watch-not-chase — no Buy is issued, and the trigger for one is a pullback, not a further advance. The physically-backed ETF is the vehicle recommended instead, on the "no counterparty risk" argument.	read ↗
BYDDY	BYD Company	QT · SA · STK	Neutral	The single company carrying the demand argument — cited as data, not as a call. "BYD (the world's largest auto exporter) PHEV exports grew from 11.6% to 37% of total export mix," and "China's auto market tells the story in pretty stark fashion. PHEVs now lead total monthly sales, surpassing 60% of the market in 2026, with BYD at the center of it." The export channel is the part that matters for palladium demand outside China: "Chinese PHEV exports to Europe grew more than 700% year-over-year, with Spain, the UK, and Belgium each posting volume increases of multi-hundred to over 1,000%," plus "comparable growth" in the UAE, Southeast Asia and South America. Two of the three named drivers are BYD-specific: "EU anti-subsidy tariffs on Chinese BEVs (PHEVs are exempt) that make PHEVs the price-competitive alternative while BYD builds factories in Hungary and Turkey," and "platforms like BYD's DM 5.0, which delivers over 2,000 km (about 1,200 miles) of combined range." Closing restatement: "the hybrid demand argument has, if anything, strengthened, as the China data, exemplified by BYD, continues to accumulate." No view is taken on BYD's shares — the company is the proof that the PHEV growth is real and exportable, and therefore that catalytic-converter palladium demand is growing where the consensus assumes it is disappearing.	read ↗
TSLA	Tesla	QT · SA · STK · FA	Negative	Named as the loser on the other side of the PHEV trade — a demand datapoint used against the pure-BEV thesis. "It's also worth noting that PHEVs are taking market share from Tesla. As The Financial Times reported last week, 21% TSLA owners are trading in their 'Musk-mobiles' for hybrids." The framing is deliberate: the entire palladium bear case is that BEVs replace ICE vehicles and "'pure' BEVs do not" use palladium, so Tesla owners defecting to hybrids — vehicles that carry a full catalytic converter and "often consume more" palladium than a conventional ICE — inverts the argument at its own source. No target, no valuation and no recommendation is given on the stock; the reference is to share loss in the segment Tesla defines, which is negative for the pure-BEV case Haymaker is betting against.	read ↗

"View" is Haymaker's stance in this post. PALL is the only rated recommendation (an explicit reiterated Buy — "we are reiterating PALL as a Buy," "we're adding to the position"). SBSW is a deliberate non-call: the endorsement was drafted and withheld after a 15% weekly rally, with a stated trigger to revisit on a pullback. BYDDY is the evidence base for the PHEV demand argument and TSLA the counter-datapoint; neither is given a target or a valuation. Referenced only (not rowed): Nornickel (Russia's ~40% of primary palladium supply — sanctioned/unlisted for Western investors, deliberately not given a ticker), the Lac des Iles mine in Ontario (ceased commercial production mid-2026), Bank of America (the ~$2,200/oz Q4-2026 target), the Financial Times (the 21%-of-Tesla-owners survey), and Bloomberg (the five-year price chart). Also referenced as context: platinum as the substitution risk at a Pd/Pt ratio of ~0.70× (the metal, not a security — Haymaker's separate platinum view lives in the platinum macro theme). Dating note: the correction is measured from a "January 2026 apex" in the Key Highlights and from the "February highs" in the technical and closing sections. Research: QT Qualtrim · SA Seeking Alpha · STK Stock Analysis.

2. Talking points

The frame — a reiteration, not a new idea

"This is a reiteration of our original recommendation, that longtime Haymakers may recall, of PALL, the palladium ETF, in April 2024. Our bullish thesis on it back then was contrarian and it has returned to out-of-favor status today."
The trigger is stated as a conjunction of three independent moves: "palladium has significantly corrected within what we believe is a long-term uptrend at the same time that the fundamental supply/demand story has strengthened. Additionally, the macro backdrop underpinning the hard-asset thesis has moved further in our direction, particularly the trend toward monetary debasement."
The post opens with a legend — ICE, HEV/FHEV, PHEV, NEV, BEV, Pd — because the entire argument turns on distinctions the market's own sales data blurs.

The numbers up front — the Key Highlights

Entry: "we are now reiterating our buy following a 1/3 correction from January 2026 apex of just over $2,000/ounce."
Target: "BofA Q4 2026 target ~$2,200/oz implying ~70% upside from spot; its base case is for flat to roughly a 23% gain" — note the range is quoted honestly, not just the bull number.
The four legs, listed in the highlights: YCC as an inflationary tailwind; 85-90% of demand from catalytic converters; PHEVs as the dominant growth segment; and supply in deficit since 2012 with Russia + South Africa at 75-80% of primary supply.

YCC — suppressing rates to manage sovereign debt costs

"We are entering what we believe is a new era of YCC. When central governments begin suppressing interest rates to manage sovereign debt costs (explicitly as Japan has done, implicitly as other OECD sovereigns are doing) the monetary debasement implications for real assets are profound."
The dated catalyst: "U.S. Treasury Secretary Scott Bessent's high-profile announcement this week to 'twist the yield curve', by selling short-term Treasuries to buy longer term issues, ignited a roaring rally in the hard-asset space, as you likely noticed (a happy event for Haymaker followers). The market reasonably believes this is a definitive first step toward YCC."
Why this pick rather than gold: "precious metals are the obvious beneficiary, but industrial metals also benefit as hard assets, often with highly favorable supply-demand characteristics of their own."

Why palladium specifically — a dual-nature asset

"Palladium is a special case because it qualifies as both a quasi-monetary asset (it is part of the Platinum Group Metals, or PGM) and it has industrial supply-demand dynamics that are separately compelling."
That is the structural point of the pick: two uncorrelated bid sources — the debasement hedge and the catalytic-converter buyer — attached to one physically constrained metal.

The consensus error — the transition was assumed binary and swift

"When we made our April 2024 recommendation, the dominant view was twofold: EVs are taking significant share from ICEs, and EVs use virtually no palladium. We believed this was wrong then and we think it's even more so now."
"The consensus assumed the internal combustion engine-to-EV transition would be binary and swift. What has actually happened is that hybrids (particularly plug-in hybrids) have become the dominant growth segment of the global 'EV market,' and these vehicles actually use catalytic converters, requiring Pd."
The quantitative punchline: "plug-in hybrids require palladium at rates comparable to conventional gasoline vehicles. Actually, they often consume more." A PHEV runs its engine cold and intermittently, which is exactly the duty cycle a catalyst is loaded for.

China — 60% of monthly sales, and BYD at the center

"China's auto market tells the story in pretty stark fashion. PHEVs now lead total monthly sales, surpassing 60% of the market in 2026, with BYD at the center of it (PHEVs have grown from 11.6% to over 37% of its total export mix)."
The export channel: "Chinese PHEV exports to Europe grew more than 700% year-over-year, with Spain, the UK, and Belgium each posting volume increases of multi-hundred to over 1,000%. Emerging markets in the UAE, Southeast Asia, and South America are seeing comparable growth."

Three forces behind the PHEV surge

"1) range anxiety in markets where charging infrastructure remains incomplete."
"2) EU anti-subsidy tariffs on Chinese BEVs (PHEVs are exempt) that make PHEVs the price-competitive alternative while BYD builds factories in Hungary and Turkey" — a policy distortion that directly subsidises the palladium-consuming drivetrain.
"3) platforms like BYD's DM 5.0, which delivers over 2,000 km (about 1,200 miles) of combined range" — the product-level answer to the range objection.

Two accelerants — the Iran War and defecting Tesla owners

"The Iran War adds an underappreciated accelerant: spiking oil prices and energy supply uncertainty have pushed consumers toward PHEVs as the practical shift away from fuel dependency. They also provide a hedge against grid failures and other electricity supply disruptions. Those, as we know, are becoming increasingly common."
"It's also worth noting that PHEVs are taking market share from Tesla. As The Financial Times reported last week, 21% TSLA owners are trading in their 'Musk-mobiles' for hybrids."

Supply — 14 straight years of deficit

"Global Pd supply has been in a persistent deficit for 14 consecutive years. The 2023 deficit was 0.9 million ounces; 2024 was 0.5 million ounces. An expected 2026 surplus has been repeatedly pushed back as supply tightens."
"The Lac des Iles mine in Ontario ceased commercial production mid-2026, removing one of the few significant non-Russian, non-South African sources" — the supply that could have answered a sanctions shock is the supply that just left.

The recycling leg — the fleet is getting older, not scrapped

"Recycling supply has shrunk rather than grown: U.S. vehicles now average a record 12.6 years as owners delay scrappage, and recycling supply fell approximately 700,000 ounces between 2022 and 2024, about 25% of total reprocessed availability and around 10% of total palladium supply."
This is the least-watched line in the piece: secondary supply is normally the elastic buffer that caps a metal price, and here it is contracting for a demographic reason (affordability, delayed scrappage) that no price signal quickly reverses.

The geography — and the sanctions tail

"Russia's Nornickel controls approximately 40% of global primary supply, while South Africa represents approximately 35%."
"Western sanctions have thus far exempted palladium under automotive industry lobbying pressure, but Montana lawmakers are actively pushing the White House for harsher restrictions. Any escalation would be an acute supply shock not remotely priced into the current $1,300 spot price."
Note the shape of the risk: the tail is free optionality in the pick, because the current price assumes the exemption holds indefinitely.

The technical signal — a break of the downtrend, not a new uptrend

The prior round-trip is stated plainly: "Pd essentially doubled in 2025, handsomely rewarding Haymaker readers who acquired it in 2024… Late last year, we suggested holding off on trimming due to a brief, but sharp, sell-off. Pd did, indeed, vigorously rebound early this year, giving readers who held it a chance to book extremely lush gains."
What happened next and why it matters: "like nearly all important commodities, including gold and silver, it entered a deep corrective phase… This undoubtedly has shaken out most of those who simply chased the momentum and are not believers in the structurally bullish fundamental story. The Hormuz-related risk-off sentiment in commodities also pressured Pd along with its peer group."
The scorecard, both sides: "Pd has held around its initial breakout point from last year; the less upbeat aspect is that it remains well below its 200-day moving average… However, the steep downtrend it's been in for most of 2025 has been broken."
The general rule being applied: "sell-offs of this magnitude are common with metals and they tend to drive out the hot money, creating opportunities for those who are taking the long-term view."

Arguing the other side — "third-degree burned"

"If you've been a palladium bull over the last few years, there's a pretty good chance you've been burned, as in third-degree burned. The metal hit $3,430 in March 2022, then collapsed approximately 70% as worst-case Russia sanctions failed to materialize and the EV bear narrative returned."
The behavioural point: "most investors struggle with this type of volatility, particularly those of a trend-following disposition."
The self-reinforcing data problem: "the perception of the EV risk has proven durable, exacerbated by the confusing manner in which many sources report EV sales by including plug-in hybrids in the total. As we've seen, PHEVs are where the truly explosive growth is occurring."

The other two risks — ICE bans and platinum substitution

"European regulation is moving toward ICE bans in the 2030s (a development we seriously doubt for practical reasons; ICEs still represent around 95% of the existing global vehicle fleet)."
"Platinum-for-palladium substitution is another risk: at higher palladium prices, automakers have economic incentive to reformulate catalyst systems toward platinum, and they have done so previously. At the current palladium/platinum ratio of approximately 0.70x the pressure is limited, but a strong recovery could reintroduce it."
The hedge inside the hedge: "of course, platinum prices could also soar, as they did last year, an outcome we believe is plausible, even probable" — which would push the ratio back down and re-close the substitution window.

The bottom line — the same movie, the second showing

"We doubt Pd's struggles this year represent a fundamental deterioration. The supply deficit has not reversed and the Lac des Iles closure has removed more supply since the highs, not added it. The hybrid demand argument has, if anything, strengthened, as the China data, exemplified by BYD, continues to accumulate."
"We have seen this movie before; it's the setup we identified in 2024. We believe the current correction has created another excellent accumulation opportunity within what we believe is a long-term uptrend."
The technical rule stated as a general principle: "when a physically constrained commodity with a persistent structural deficit breaks a near-term downtrend, the prior trend has historically tended to regain its momentum."

The verdict — and why the ETF rather than a miner

"With PALL, we're buying a physically scarce metal in persistent deficit since 2012, produced predominantly in two politically charged geographies, and with a demand structure the consensus has systematically underestimated. We're adding to the position at a price 1/3 below its February highs at a time when there is a misperception that pure EVs are the next-generation automotive technology to embrace."
"It seems to us that the market has a double blindspot regarding palladium" — it misreads the demand trend and ignores the supply deficit.
The vehicle choice is argued explicitly: "PALL, the physically backed ETF, has no counterparty risk, and is a convenient way to hold this key metal."
"We believe this year's shakeout creates a compelling risk/reward for investors who understand that the EV transition is moving through hybrids, not past them, and that palladium supply is not growing to meet it. We are reiterating PALL as a Buy."

The SBSW footnote — an endorsement withdrawn by the tape

"We were intending to include an endorsement of the world's largest palladium producer, SBSW, which we previously brought to your attention as a high-risk play on this critical metal in May 2024. (We suggested profit-taking on it last December.)"
"However, as we were preparing to write this note, it began a ripping rally and is now up 15% this week alone. We will keep an eye on it and advise if it settles back."
The discipline on display: the equity version of a thesis he is publishing is not published, purely because the entry moved against the reader between drafting and sending. The entry price is treated as part of the recommendation, not as a detail.

3. In plain English

A jargon-free note on why each name is cited. (Companion to the table above; renders on each name's consolidated page.)

PALL — abrdn Physical Palladium Shares ETF Positive

PALL is not a company. It is a fund that does one thing: it buys physical palladium bars, stores them in a vault, and issues shares against them. Buy a share and you effectively own a slice of metal in a vault — no mine to run, no management to trust, no debt. Hay's phrase for the appeal is "no counterparty risk": there is nobody who has to stay solvent or honest for you to still own your palladium.

Palladium is a silvery metal used overwhelmingly for one job. Between 85% and 90% of the world's demand comes from catalytic converters — the box in a car's exhaust that turns poisonous gases into harmless ones. A petrol car needs one. A hybrid needs one. A pure battery-electric car has no exhaust, so it needs none. That single fact is why the market abandoned palladium: everyone concluded that electric cars would replace petrol cars quickly, so demand for the metal would collapse.

Hay's argument is that the market got the shape of the transition wrong. What is actually growing fastest is not the pure electric car but the plug-in hybrid — a car with both a battery you charge from a socket and a normal petrol engine. Those cars have full catalytic converters, and because their engine runs in short cold bursts rather than continuously, they often need MORE palladium than an ordinary petrol car, not less. And the confusion is baked into the data everyone reads: most published "EV sales" figures lump plug-in hybrids in with pure electrics, so the number that looks like the death of palladium is partly the growth of palladium.

The evidence is Chinese. More than 60% of monthly car sales in China in 2026 are now non-petrol vehicles, led by plug-in hybrids, with BYD at the centre. BYD's exports have shifted from 11.6% plug-in hybrids to over 37%. Chinese plug-in hybrid exports to Europe grew more than 700% in a year. Three reasons: buyers in places without much charging infrastructure want a petrol engine as backup; the EU put anti-subsidy tariffs on Chinese pure-electric cars but exempted plug-in hybrids, making the hybrid the cheap option; and the newest platforms go over 1,200 miles on a combined tank and charge. Two extras push the same way — the Iran war has made petrol expensive and grids unreliable, which favours a car that can run on either, and the Financial Times reports that 21% of Tesla owners trading in are switching to hybrids.

Now the supply side, which Hay says almost nobody is looking at. The world has used more palladium than it produced for fourteen years running — a 0.9-million-ounce shortfall in 2023 and 0.5 million in 2024. The surplus forecasters keep promising keeps being pushed back. A significant Canadian mine (Lac des Iles) shut down in mid-2026, and it happened to be one of the few sources outside Russia and South Africa. Recycling, which normally acts as a shock absorber, is shrinking rather than growing: Americans are keeping cars a record 12.6 years on average instead of scrapping them, so roughly 700,000 ounces a year of recycled metal — about a tenth of total supply — has simply stopped appearing. And of what is mined, Russia's Nornickel produces about 40% and South Africa about 35%. Sanctions have so far spared palladium because carmakers lobbied for the exemption, but Montana politicians are pushing to end it. If that happened, the price would gap — and at today's roughly $1,300 an ounce, none of that possibility is priced in.

The macro layer sits on top. Governments with too much debt eventually stop letting interest rates rise, because they cannot afford the interest — Japan does this openly, others quietly. Hay believes America has just taken its first public step down that road: Treasury Secretary Bessent announced a plan to "twist the yield curve," selling short-term government debt to buy long-term debt, which pushes long-term borrowing costs down. When money is deliberately made cheaper than it should be, the currency loses value and physical things gain it. That is why hard assets rallied on the announcement. Palladium is unusual in being two things at once: a precious metal in the platinum family, which benefits from that money-printing logic, and an industrial metal with its own shortage.

He argues the other side properly. Palladium hit $3,430 in March 2022 and then fell about 70%, so anyone who bought the last story got hurt badly. Europe has legislated bans on petrol engines in the 2030s, though he doubts they will stick given that petrol cars are still about 95% of all vehicles on the road. And carmakers can substitute platinum for palladium in a converter when palladium gets expensive — they have done it before. Right now palladium costs about 0.70 times what platinum does, which is cheap enough that no one bothers switching, though a big rally would revive the risk.

The entry logic is simple and repeatable. The metal roughly doubled in 2025, then fell by a third from its early-2026 peak of just over $2,000 an ounce — a fall he attributes to momentum traders being flushed out rather than to anything breaking. The chart supports him partially: the price has held the level from which it originally broke out, and the year-long downtrend has ended, though it is still below its one-year average price. Bank of America has a $2,200 target for late 2026, about 70% above today's price, with a more conservative case of flat to +23%. His verdict: same setup as 2024, cheaper price, better fundamentals — "we're adding to the position," and PALL is reiterated as a Buy.

SBSW — Sibanye Stillwater Neutral

Sibanye Stillwater is the world's largest palladium producer — a South African miner that also owns the Stillwater operation in Montana, the only significant US source of the metal. It is the obvious way to make a leveraged bet on the same idea as PALL: if the metal rises 20%, a miner's profits can rise far more, because its costs are largely fixed. That leverage runs both ways, which is why Hay originally introduced it in May 2024 as a "high-risk play" rather than a core position, and why he told readers to take profits on it last December.

The interesting part of this note is what did not happen. Hay had written an endorsement of the stock to accompany the palladium call, and pulled it before publishing — because in the days he was drafting, the shares ripped 15% in a single week. His stated position is to watch it and "advise if it settles back."

That is a stance, and worth reading as one: the thesis on the metal is unchanged, but he treats the entry price as part of the recommendation rather than a detail. A name that has already jumped 15% before his readers can act is a name he will not tell them to buy. For the reader the practical translation is: interested, not endorsed, and the trigger to revisit is a pullback rather than further strength. Meanwhile the recommendation he did make — the physical metal via the ETF — carries no mining risk at all: no South African labour disputes, no shaft accidents, no cost inflation, and, as he puts it, no counterparty risk.

BYDDY — BYD Company Neutral

BYD is the Chinese carmaker that has become the world's largest vehicle exporter. Hay does not offer an opinion on its shares — the company appears in this note purely as the evidence that his palladium demand argument is real rather than theoretical.

The specific numbers he uses: plug-in hybrids have gone from 11.6% to over 37% of BYD's export mix, and Chinese plug-in hybrid exports to Europe are up more than 700% in a year, with Spain, the UK and Belgium each up several hundred to over a thousand percent. BYD is also building factories in Hungary and Turkey — which matters because the EU's anti-subsidy tariffs hit Chinese pure-electric cars while exempting plug-in hybrids, effectively steering the company toward the drivetrain that needs a catalytic converter. And its DM 5.0 platform delivers over 2,000 kilometres of combined range, which removes the practical objection to a hybrid.

Why an investor in a palladium fund should care: every one of those exported plug-in hybrids contains a full catalytic converter, and therefore palladium. If the fastest-growing part of the "electric vehicle" market is actually a car with a petrol engine in it, the consensus assumption that electrification destroys palladium demand is not just early — it is pointed the wrong way. BYD is the single company that makes that case concrete, which is why Hay closes by noting that "the China data, exemplified by BYD, continues to accumulate."

TSLA — Tesla Negative

Tesla appears here for one line, but it is a load-bearing one. Hay cites a Financial Times report that 21% of Tesla owners trading in their cars are switching to hybrids.

The reason that matters is that Tesla is the pure battery-electric car company — the embodiment of the assumption underlying the whole bear case on palladium. That case runs: electric cars replace petrol cars, electric cars have no exhaust, no exhaust means no catalytic converter, no converter means no palladium. If a fifth of the people who already bought into pure electric are now moving to a car that has a petrol engine and therefore a converter, the assumption is failing at exactly the point where it should be strongest.

It is worth being precise about what is and is not being said. Hay gives no price, no valuation and no recommendation on Tesla shares. He is making a demand observation about the segment Tesla defines, and it is a negative one for the pure-electric story: the customers are drifting toward the drivetrain that consumes the metal he is buying.

Summary derived from the paid Haymaker newsletter (text in transcript.txt) for personal study. Not investment advice. © Haymaker / David Hay for source material.