PGMs could be the metals of the year?

[jim4silver]

There is not as much info out there on PGMs like there is for gold and silver. But what info is available seems to point towards higher prices in the PGMs in my opinion medium and long term (probably short term too, but we are due for a correction at some point).

There are problems in South Africa relating to the mines themselves. Amplats talks about laying off 14000 workers and shutting down mines, to save money and probably also to reduce the supply of the metals (equals lower supply and thus higher prices). There was outcry when they announced the 14000 layoffs, so they are doing a 60 day period where the company talks with the unions and such. How those talks unfold could cause a sudden movement one way or the other, but long term things look good for the PGMs via supply side issues. My guess is that the company will announce some alternative future projects to try and keep everyone happy while they shut down the mines and lay the workers off. If that happens and the laid off workers don't get jobs quick, I could see more unrest this summer like last summer, but I am just speculating on this.

Last year some protesting miners were shot dead during the "wildcat" strikes. Those strikes killed off 3 months or so of production in total, and from what I can find online, the mines are today not quite up to what they were before the strikes happened, (I don't know if that is accurate or not but to me seems possible).

Demand is another story, but some say more autos will be produced this year than last, and more next year than this year, etc. China and the rest of Asia will probably keep raising their catalyst emission requirements as time goes on (necessitating the need for more PGMs). Further, Russia's national palladium stockpiles which have been sold into the market each year for a long time to help demand, are allegedly gone or nearly gone. If true, this will affect palladium in a good way even if demand simply remains at current levels, even though demand is projected to rise for the next few years.

The only downside for PGMs is more supply coming on board (not likely at all) and/or lower demand for them in the auto industry. As long as they don't find a substitute for palladium and rhodium (and lesser extent platinum) in the auto catalysts, there will always be huge demand over time. Any realistic and cheaper alternative would be a deal killer for the PGMs, but from all I can find out there, the only thing they have been able to do is reduce the amount of PGMs by making the devices more efficient.

PS Here is a timely story:

Amplats Workers, Security Guards Injured in Mine Clashes - Bloomberg


All just my opinion.

Jim

 

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[Jim in Idaho]

The only problem with the PGM's is that they are mostly industrial metals. That means the overall economy has a big effect on their prices. Since the economy is so volatile, nobody knows for sure just what platinum will do. You know it's going higher in the long run, but timing the increase is what's difficult. Gold, on the other hand owes very little of its value to industry. In fact, the worse the economy does, the better gold does...mainly because the politicians keep trying to boost the economy by printing money, thus raising the price of gold, and to a lesser degree, silver.
Jim

 

[Marchas45]

Heck Jim I just sold my mining stocks this morning that I was playing with for the past month but they where not strictly PGMs and I came out with a loss but it was a learning experience for me so now I will be ready to jump in if I see anything happening. Lol

 

[jim4silver]

The only problem with the PGM's is that they are mostly industrial metals. That means the overall economy has a big effect on their prices. Since the economy is so volatile, nobody knows for sure just what platinum will do. You know it's going higher in the long run, but timing the increase is what's difficult. Gold, on the other hand owes very little of its value to industry. In fact, the worse the economy does, the better gold does...mainly because the politicians keep trying to boost the economy by printing money, thus raising the price of gold, and to a lesser degree, silver.
Jim

I agree that PGMs are industrial, and that is why I like them as part of my PM portfolio. Gold and silver are great but subject to what many call "manipulation" because there is enough physical out there so that the paper players can do what they will as long as they can deliver the physical when they have to. You don't see this with the PGMs, at least not yet.

The interesting thing about palladium and rhodium (I don't have much platinum so I am not interested in it per se) is that their supply is far less as compared to gold and silver. And the regions where it is mined are pretty unstable (not counting Russia for its palladium which is stable). Much of it can be recycled/refined from old converters, but the ones with many years of use don't yield much compared to what went it when it was made. The amount of actual PGMs in a dollar amount in each converter is relatively low because only a few grams of the metals are used in each one, and not all the converters make it to the refiner.

I am not recommending anything to anyone, just wanted to expand a bit since most of the PM talk is about silver and gold. And if the paper players can keep them down for the next few months or even a year, a person might miss out on some gains in PGMS IF they have problems this summer in the mines and/or if Russia's palladium stockpile has been exhausted as has been revealed.

As far as bad economies and such, Asia and many other areas are growing and propering and there are millions who have never owned cars and now want them because they can now afford them. Even here with a bad economy car sales are doing well, and all the cheap money from the banks is making it easy for car loans to be given to those who might not have great credit, etc. So even if other things are doing bad in the economy, people will always be buying cars to some degree unless we fall into a world wide depression. In that case the dollar goes up and PMs go down, unless it is a hyperinflationary situation, then PMs would rally.

But nothing is ever a sure bet, even gold and silver could be hurt if they ever start to raise interest rates again or even threaten no more QE.

Jim

 

[Jim in Idaho]

I'm not saying you're wrong...just making the point that timing is critical, and there are many factors beyond control when it comes to the Platinum group metals. Another factor that favors gold and silver is the liquidity of those markets. It's always easy to find a buyer, or seller. If you have physical possession of platinum, it might be difficult to sell when the time comes you need the money. Eventually I think it will be more commonplace for people to own platinum, but that time isn't here yet, so you mostly have to be satisfied with paper investments of some kind. In a big meltdown of the economy, those paper investments might not be too shiny.
And, the Asian miracle isn't all that bright....China has many of the same problems we do, and have financed a big bubble in real estate, which has yet to be reckoned with....no guarantees on how all that will work out. Overall, they are still a much poorer nation than we are...at least for awhile...LOL
Jim

 

[0121stockpicker]

everything you need to know about PGMs. JM one of the largest PGM refiner, etc, etc. I was a metals/mining analyst at a very large mutual fund during the mid / late ninties and owned / did extensive research on the PGM industry. Prob still dangerous enbough to answer any questions if you have any. But the JM reports are fantastic - this is the PGM bible and its free. Can even get a nice glossy copy sent to you in the mail. Best

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