Last October, precious metals futures finally strengthened, regaining their “safe haven” status after a long slump. The rise, however, was short-lived, and even worse slumps are expected during the next few months. Not every precious metal has to worry; although gold fell this week as the dollar fared well against the euro, gold purchases are still considered low-risk, with forecasters expecting a mere nine percent drop next year. But platinum, palladium and silver have reason to fear for the year ahead.
Platinum has certainly suffered since the metal hit an all-time high this March, back when platinum sold for $2,290 per ounce. Having already fallen 65 percent since the spring, recent forecasts slashed platinum futures 50 percent, sliding from $225 per ounce to $1,050. Fewer car sales and shrinking demand from the automotive industry seem to take the blame.
Palladium can expect a similar decline, as median forecasts for 2009 show an identical 50 percent drop at $225 per ounce. Earlier this fall, MetalMiner reported a forecast from leading platinum refiner Johnson Matthey, and the estimates still seem possible: palladium prices could fall flat within the next six months. As analysts predict 12-year lows for palladium next summer, even companies like Norilsk, the world’s leading palladium producer, recently reported plans to close less profitable plants before the predicted drop occurs.
Silver’s developing slump might not seem as drastic as the slides facing palladium and platinum, but the precious metal has to face its own unsettling future. Since Monday’s close, silver has risen about 2.5 percent, but the next year looks challenging: “Analysts have cut their median 2009 silver forecast more than 40 percent since July to $10 an ounce,” the Guardian (UK) reports.
Any silver lining in the slump still isn’t evident for precious metals, but their journey closely mirrors the economy. As the economy slides, we can expect the same from palladium, platinum and silver. But when demand resumes? That’s another story.