Baby, You Cannot Drive My $220K Car


"Platinum and palladium continue to march toward higher price ground."

Resource Investor, Jon Nadler

Some of this week's emergent trend toward "No Mas Dinero" from the Fed has raised question about the "wisdom" of certain strategies and bets—say, like the ones made by PIMCO's chief, who this week emphatically predicted there'd be no QE3, while he stands to (via the PIMCO TRF) remain unprofitable—so long as QE3 doesn't land on the scene and doesn't continue to divert money from the fixed income space into equities—mostly commodities. Evidently, the fund manager's amenable to near- and medium-term losses.

Platinum and palladium continued to march toward higher price ground today, with platinum adding $8 to open at $1,829/oz. and palladium climbing to a near three-month peak of $808/oz.

Palladium demand seemed buoyant in European markets this week.

Both metals gained despite the acknowledgement that China will miss its 2011 auto sales forecast, as declining car purchases last month contributed to such perceptions. Albeit, the fall in May's auto demand was rather small (0.11%), it was still the first such countertrend move in over two years.

But there are no such woes with entry level $220,000 Porsche sales in China. With 1.1 million new millionaires looking to rid themselves of nouvelle richesse, the market for these cars there appears to know no bounds.

Analysts blamed auto-sales results on the cessation of government car-buying incentives, in oil price spike and spotty availability of Japanese models. Also contributing to the sales drop was the car-ownership limits China has begun imposing in clogged and polluted cities.

Projections of an additional 10%–15% growth in Chinese auto sales for 2011 will need revision soon, supercar sales notwithstanding. Note that China's overall auto sales showed gains at 46% and 32.4% in 2009 and 2010, respectively. A 2011 gain of just 10% would, thus, be seen as a de facto "crash."

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