Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Stocks, Bitcoin and Crypto Markets Breaking Bad on Donald Trump Pump - 21st Nov 24
Gold Price To Re-Test $2,700 - 21st Nov 24
Stock Market Sentiment Speaks: This Is My Strong Warning To You - 21st Nov 24
Financial Crisis 2025 - This is Going to Shock People! - 21st Nov 24
Dubai Deluge - AI Tech Stocks Earnings Correction Opportunities - 18th Nov 24
Why President Trump Has NO Real Power - Deep State Military Industrial Complex - 8th Nov 24
Social Grant Increases and Serge Belamant Amid South Africa's New Political Landscape - 8th Nov 24
Is Forex Worth It? - 8th Nov 24
Nvidia Numero Uno in Count Down to President Donald Pump Election Victory - 5th Nov 24
Trump or Harris - Who Wins US Presidential Election 2024 Forecast Prediction - 5th Nov 24
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Palladium Showing Great Relative Strength Versus Gold in 2013

Commodities / Palladium Jul 10, 2013 - 04:16 PM GMT

By: Jeb_Handwerger

Commodities Precious metals and oil (DBO) seem to have reversed higher last week on the military coup in Egypt. Bernanke is scheduled to speak and the markets may already be pricing in some dovish statement to alleviate fears of tapering which could cause some short covering and bargain hunting. Prices of platinum (PTM) and palladium (PALL) continue to outperform other metals such as gold (GLD), silver (SLV) and copper (JJC) over the past 9 months. For many months, I have been warning my readers about the growing risks to platinum and palladium supply as labor strikes intensify in South Africa.




Palladium is the only metal that is higher over the past year. Palladium is up over 14% over the past year while platinum, copper, gold then silver are still in negative territory. Palladium and platinum are showing great relative strength in this precious metals correction. I forecasted this since the end of October 2012.

Some of the largest platinum and palladium producers in South Africa are suffering from the labor disputes and violence. South Africa accounts for close to three quarters of the world's platinum supply.

I do not believe that long-term solutions will be worked out there between the unions and the mining companies. Some of the miners have settled but it comes with increasing costs to miners who are already barely marginable.

The risks to disruptions in production are just too great for new capital going into South Africa mines. Once production is disrupted and the deep underground mines are closed it is very difficult and costly to restart.

The geopolitical instability from South Africa may have a significant impact on the supply demand equation for Platinum Group Metals. These metals are crucial to reduce noxious emissions from vehicles as they are used in catalytic converter to lower tailpipe emissions.

No suitable economic replacements for PGMs have been found. Vehicle sales are increasing worldwide especially from emerging economies.

Emission standards are being implemented in emerging economies. Demand for PGMs is skyrocketing as we are seeing a rebound in the North American, Japanese and Chinese automobile sector. Supply is extremely tight from South Africa.

Major strategic consumers could be actively searching for safe and secure supplies of platinum and palladium.

Keep a close eye on top platinum/palladium projects in North America. One small junior PGM miner in North America just completed close to a $6 million financing which shows strong support for the caliber of the company's platinum and palladium assets in the Yukon and Ontario.

Investors should look for platinum and palladium projects in safe jurisdictions as the fundamentals are extremely strong with rising demand and declining supply from South Africa, which produces over three quarters of current supply.

This supply demand imbalance should impact the price over the long term. This correction in the mining sector (GDX) is one of the strongest declines in history and is similar to the 2001 thirty-year low in the mining sector. At that time similar to now, major miners (SIL) were shutting down mines and cutting back. Although it looks negative for the short term, these are the sort of moves that are characteristic of a major bottom. Mines take time to build and expand. There are major lag times that create shortfalls should prices move higher.

The mothballing of projects may be setting the stage for the next major super-cycle in commodities as supply is constrained. The pain that we are seeing in the sector now is setting the stage for the next boom and may be an excellent opportunity for top junior miners developing top notch assets.

Although this is a painful correction, many expect this downturn to lead to higher valuations down the road and increased merger and acquisition activity. Investors should focus on high quality assets with strong management teams and shareholder support that is advancing PGM development.

The supply of PGMs comes mostly from unstable mining jurisdictions. High quality projects in safe jurisdictions could become increasingly valuable as there is a need for a safe and secure supply of these critical platinum and palladium metals.

Disclosure: Author does not own any of the securities mentioned.  Read more at http://goldstocktrades.com/blog

Subscribe to my free newsletter to get up to the minute updates on rare earths, uranium, gold and silver.

By Jeb Handwerger

Disclosure: Author owns no stocks mentioned.

http://goldstocktrades.com

© 2013 Copyright Jeb Handwerger - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Jeb Handwerger Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in