Swiss Fund Looks for Strength in Commodities, Particularly Platinum
Source: Reuters, Atul Prakash (5/19/09)
"China could build a strategic stockpile and investment demand could easily increase substantially. . ."
Among mining stocks, the platinum sector has good growth potential as automakers, the top consumers of platinum group metals, will have to rebuild stockpiles sooner or later for new smaller and cleaner car models, said Bernard Loriol, partner and chief executive of the fund.
Platinum's major industrial use is in auto catalysts as it helps clean environmentally damaging fumes from motor exhausts.
"China could build a strategic stockpile and investment demand could easily increase substantially," he told Reuters, adding a rise in investment in exchange traded funds (ETFs) this year could support the metal price, which could rise as high as $1,300 an ounce by end of 2009.
ETFs, backed by precious metals, saw record inflows in the first quarter of 2009 as investors sought a haven from volatility in other markets.
The world's largest platinum refiner, Johnson Matthey, said on Monday platinum prices could climb to $1,350 an ounce in the next six months if investment demand firms and Chinese jewelry buying stayed strong.
Spot platinum traded at $1,117 an ounce on Monday.
Best Asset manages about $100 million and mainly invests in platinum-exploring companies located in South Africa—the world's top platinum producer contributing about 80% to global production.
"If one wants to take risks, I prefer the platinum group metals sector with good balance sheets and having the leverage underground and not in the books," Loriol said.