Is Platinum Ready To Rock?


"Platinum prices. . .cruised upwards to potentially disaster-saving levels around $1,150 an ounce, the best seen since September."

Few metals - or commodities - have bounced by 50% or more from trough prices, typically seen around October 2008; among them may be counted platinum, silver, lead (a small base metal) and cocoa. For platinum miners, the return to some respectability of key platinum group metal (PGM) prices may have averted a general and painful disaster within the specialized global subsector.

Platinum prices crashed by way more than half from records around $2,225 an ounce during 2008 to around $744 during October and have since cruised upwards to potentially disaster-saving levels around $1,150 an ounce, the best seen since September. Palladium has shifted up by 38% from its lows to around $221 an ounce; rhodium, driven by insane speculators to around $10 000 an ounce during 2008, is trading around $1,000 an ounce.

Nickel prices are only just showing signs of coming out of a horrific slump, with a bounce of around 10% from lows.

While PGMs may well have been overbought during 2008, the crash in the latter part of the year could equally have been a case of panic overselling. PGMs are relatively small in metal markets, underpinning the likelihood of overbuying, and were exposed to overselling given that demand for auto catalysts, the key PGM market, collapsed in line with developments in the global auto and truck sectors.

By the same token, PGM miners were quick to react on the supply side, cutting and rationalizing across the board, underpinning the case for PGM prices to regain some respect. There have been recent reports that jewelry demand, stimulated by lower PGM prices, has been firming in parts of Asia.

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