frenchee
15 years ago
Platinum Gets Set for Rebound
By ALLEN SYKORA
DJ-AIG Commodity Indexes
PLATINUM APPEARS TO HAVE JUMPED the starting gun in 2009. As a result, it may end up back at the starting blocks. But by year end, the price of this once high-flying metal could pick up speed again.
"In the second half, we could see an improving car industry," says Sterling Smith, vice president with Chicago brokerage FuturesOne. The metal is widely used in automobile catalytic converters.
Nearby platinum on the New York Mercantile Exchange hit a record $2,308.80 an ounce last March before tumbling with other commodities, and was additionally pressured by the unwinding auto industry. Platinum bottomed at $761.80 in October; most-active April platinum ended Dec. 31 at $941.50 an ounce and hit $1,011.60 on Jan. 7. The contract settled Friday at $953.30 an ounce, down 5.2% for the week as the weak economic fundamentals reasserted themselves. Still, it remains 1.3% higher since Dec. 31.
Although industrial demand remained weak, platinum poked above $1,000 again earlier this month due to jewelry-related buying ahead of the Chinese New Year, new jewelry lines in India and investor demand. "But with that said, we see a period of weakness over the first half of the year," says John Mothersole, senior economist with international consultant IHS Global Insight. "That suggests the bounce in prices we've seen might be a little bit premature."
The crumpled car sector means there's still drag on demand, and financially strapped auto producers may be reluctant to build inventory. They might even dump supplies, says Bart Melek, Toronto-based commodities strategist with BMO Capital Markets. The weak economy could also dent jewelry demand in Western nations. This has Melek and Mothersole looking for a global surplus in '09. Beyond the first half of 2009, the anticipated U.S. stimulus should begin to boost demand, as should efforts in the U.S. and Canada to free up credit for car loans, Melek says.
New York-based commodities-research firm CPM Group sees prices around $850 to $900 much of the first three quarters, but then averaging $1,050 to $1,060 in the fourth and perhaps $1,300 in 2010, says analyst Rohit Savant. BMO looks for a first-half average of $938, then $975 in the second. More conservatively, Mothersole of IHS forecasts a trough of $800 in the second or third quarter before a recovery, with the average not moving back above $1,200 an ounce until 2011 to 2012.
[DJAIG chart]
Still, Ron Coby, co-founder of Coby Lamson Capital Management, looks for a kind of bear-market rally, with platinum perhaps bouncing to $1,500 on a technical correction in 2009, he says, before all markets re-test their lows by year end.
On the supply side, FuturesOne's Smith cautions, platinum is a small market, vulnerable to disruptions such as strikes or natural disasters. (In South Africa, which provides 75% to 80% of the world's primary supply, electrical shortages curtailed mining activity last year.) In fact, Mothersole says that prices around $1,000 are already around the marginal operating cost, defined as the average cash operating cost for the upper quartile of mines. He adds that these costs are likely to slowly rise -- reinforcing the likelihood of a price rally.
NYMEX CRUDE-OIL FUTURES were chilled by the continuing bearish outlook for the economy. The February contract fell 10.58% on the week, to $36.51 a barrel.
MWM
15 years ago
Platinum's turn to shine
Don Vialoux, Financial Post
Published: Saturday, January 10, 2009
A worker casts an ingot of platinum at the Krastsvetmet nonferrous metals plant in the Siberian city of Krasnoyarsk. The platinum price has plunged but incentives to revitalize the auto industry ...
The outlook for platinum is improving. Thackray's 2009 Investor's Guide notes that platinum has a period of seasonal strength from the end of December to the end of May. The trade has been profitable in 17 of the past 22 periods; the average gain per period was 8.3%.
In contrast, the average gain for gold during the same period was only 0.9%.
TECHNICAL INFLUENCES
Technical prospects for platinum have turned positive. A strong recovery rally is due. Platinum fell 67% from its high at US$2,299 per ounce in February to its low at $752.10 in October.
Platinum recently broke above a double bottom pattern on a move above resistance at US$896 and has established an intermediate uptrend. Next intermediate technical target is US$1,200.
The chart shows the optimal entry points over the past seven years.
Other precious metals (gold, silver, palladium) also have developed positive intermediate technical profiles. Platinum will "piggy back" on their strength into spring.
FUNDAMENTAL INFLUENCES
Fundamental prospects for platinum are just starting to turn positive. Demand for Platinum mainly comes from jewellery (40% of demand) and catalytic converters used in the auto industry (37%).
The main reason for the price decline during the past year has been a drop in demand for platinum used in catalytic converters. U. S. auto sales virtually collapsed but the low point appears to have been reached. Canadian and U. S. government support of the auto industry will kick-start demand for autos in the first quarter of 2009.
Demand for platinum by the auto industry will recover as the year progresses. Meanwhile, demand for platinum for jewellery purposes has started to recover due to its current low price relative to gold.
A direct way to invest in platinum for the current period of seasonal strength is to own iPath platinum Exchange Traded Notes (PGM/ NYSE). Technicals on PGM are almost identical to technicals for the commodity.
Platinum equities also are available; consult your advisor for specific recommendations. But avoid junior non-producing companies in the sector.
--- - Don Vialoux, chartered market technician, is the author of a free daily report on equity markets, sectors, commodities, equities and exchange-traded funds. Reports are available at www.timingthemarket.ca. Mr. Vialoux does not own platinum ETFs or stocks mentioned in this report.
http://www.nationalpost.com/story.html?id=1161545
MWM
15 years ago
Gold Little Changed on Dollar, Platinum Climbs on Auto Bailout
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By Aya Takada
Dec. 26 (Bloomberg) -- Gold traded little changed in Asia after the dollar steadied against the euro, weakening investor appetite for bullion as an alternative asset. Platinum rose.
Gold is headed for a third weekly gain as the dollar is still set to drop against the euro for a fifth week. Platinum advanced as the Federal Reserve bolstered plans to save General Motors Corp., easing concern demand will drop for the metal used in car catalysts.
“Gold is solid as the dollar is under pressure because of a deepening U.S. recession and the Fed policy of keeping interest rates near zero,” Tatsuo Kageyama, an analyst at Kanetsu Asset Management Co. in Tokyo, said today by phone.
Bullion for immediate delivery added 0.2 percent to $848.50 an ounce at 4:28 p.m. in Tokyo. December-delivery gold on the Tokyo Commodity Exchange gained 0.7 percent to 2,470 yen per gram ($849 an ounce).
The dollar fell 0.3 percent to $1.4060 per euro at 4:31 p.m. in Tokyo. The U.S. currency is headed for its first weekly gain against the yen in two months after Japanese industrial production slumped.
Japan’s recession deepened in November as companies cut output at the fastest pace in 55 years and rising unemployment prompted households to pare spending.
Bullion was also supported as crude oil in New York rose for the first time in three days, boosting the appeal of the precious metal as an inflation hedge. It traded 3.3 percent higher at $36.52 a barrel.
Silver for immediate delivery added 0.8 percent to $10.41 an ounce.
Platinum, Palladium
Platinum and palladium advanced after GMAC LLC won Federal Reserve approval to become a bank holding company, a switch that may enable money-losing auto and home lenders to tap U.S. financial bailout programs to help keep them in business.
“The plan may make it easier for U.S. consumers to get car loans, leading to a recovery in auto sales,” Kageyama said. Both platinum and palladium are used for pollution-control devices in cars and trucks.
The Fed used emergency powers to grant Detroit-based GMAC’s request, citing turmoil in financial markets and the potential impact on GM, the biggest U.S. automaker, which has warned it’s running out of cash. Dealers and analysts say a GM rescue is more likely to work if GMAC is still around to make car loans, which the Fed’s action ensures.
Platinum for immediate delivery added 2.6 percent to $882.50 an ounce at 4:35 p.m. in Tokyo. December-delivery platinum on the Tokyo Commodity Exchange rose 3.9 percent to 2,582 yen a gram. Immediate-delivery palladium gained 0.6 percent to $174.75 an ounce.
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