Shares of Sibanye-Stillwater (NYSE:SBGL) jumped more than 10% by 3:00 p.m. EST on Monday. Driving up the mining stock was a massive surge in the price of palladium.
The spot market price for palladium spiked 9.3% today to more than $2,500 an ounce. That was the precious metal's biggest one-day gain since 2008. Furthermore, it continued the metal's rally this week, which has been its best one since 2001. Powering palladium's rally has been a combination of tight supply due to some production constraints and strong demand because of stricter emissions targets, which is forcing automakers to use more of it to make catalytic converters.
The surge in the price of palladium is great news for Sibanye-Stillwater. While the company primarily mines gold, it's also a top global palladium producer. Because of that, it's cashing in on the surging price of that metal.
The run-up in the price of palladium has helped drive a jaw-dropping 311% rally in Sibanye-Stillwater's stock over the past year. On the one hand, it could have further to run since the sector's current supply constraints don't appear as if they'll improve in the near term. However, when supply and demand do rebalance, it could cause a swift correction in Sibanye-Stillwater's stock, making it a riskier buy after its recent run.