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SHARPS PIXLEY : Platinum & Palladium Forecasts 2018

PLATINUM : AVERAGE : $884   HIGH :  $1045   LOW : $815

Platinum as a metal is highly resistant to tarnishing ... the same cannot be said of some of its applications which are starting to look distinctly unappealing. Prices of commodities in the short term are driven by sentiment and sentiment is driven by fast news flows and expectations. Sadly not much there to support this ailing metal. Many demand side applications are struggling from both thrifting and substitution, giving investors little to look to.

Jewellery demand has fallen 4 years in a row and the outlook in the auto sector from diesel engines is not promising. With total demand in decline and the market set to move to a supply surplus in 2018, we see ongoing downside pressure on prices. Once the shiniest of all precious metals, platinum is struggling to find friends.

On a positive note, we are seeing mine production down and at levels last seen in 2009 while technically on the charts platinum is distinctly oversold.

Sadly one of the strongest arguments in its favour is that so many people think poor of it.

 

PALLADIUM : AVERAGE : $1355   HIGH : $1500    LOW : $800

With a trajectory that looks like a cryptocurrency and not an industrial commodity, it is tempting to think palladium's rally cannot be sustained. Platinum's loss has been palladium's gain.

Maybe we have been watching Bitcoin and find ourselves asking ... why not higher still. Total demand is topping 10 mio and auto demand is growing ; in fact palladium saw good demand from most sectors except surprisingly from investors. The last three years have seen selling into price strength perhaps believing the rally cannot be justified. But after six years of supply deficits, stocks are thin and pipeline metal scarce. Happily for industrial users there was also weakness in the price-sensitive jewellery sector.

Meanwhile we witness declining Russian mine supplies and evidence that stocks are depleted. An eye on palladium lease rates will warn you of extreme tightness and this market has the potential to earn the name the Ford Motor Company once gave it - "un-obtainium"

The stage is set for an encore in 2018.

 

16 Jan 2018

About the author

Ross Norman

Ross started his business career with business guru Sir Clive Sinclair of Sinclair Research in Cambridge, before joining Johnson Matthey as Gold Refining Manager (then the worlds largest gold refiners), then as a gold trader at NM Rothschild & Sons (the Chairman of the London Gold Fixing) and later Credit Suisse, where he was a Senior Dealer in physical bullion trading.

Ross has an enviable record within the London Bullion Market in forecasting the gold price over the last decade and is frequently sought by the media for commentary on the bullion markets. Ross has made frequent appearances on TV (BBC, CNBC, CBC) in newspapers (FT. Wall Street Journal) as well as in the newswires (Reuters, Bloomberg and Dow Jones).

e: ross.norman@sharpspixley.com

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