Platinum, Further to Go?

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Automotive, Precious Metals

Gold, the darling of 2009 appears to be the ugly duckling of 2010 as investors’ focus switches to platinum and palladium. In spite of incessant broker promotion the gold price has stagnated over the last month after reaching a peak of nearly $1220/oz in December before becoming range bound either side of $1120/oz.

Gold Price

Investor interest has shifted to platinum and palladium as automotive manufacturing has finally come out of the parking lot in North America and Europe. Sales are predicted to pick up some 5-7% according to supplier to the industry Alcoa in their 4th quarter earnings report but some boosters are predicting an even stronger rebound. Automotive will expand output by 20% this year, Evan Smith, who helps manage $2 billion at U.S. Global Investors is quoted as saying in this blog.

One of gold’s principal supporters over the last two years have been Electronic Traded Funds, but this year ETF Securities launched their metal backed platinum and palladium funds and saw a surge in demand lifting their holdings to a record 594,465 ounces. Standard Bank called out the upside for platinum late last year in their Commodities Daily reports, largely on the back of the stronger fundamentals of restricted South African supply and returning automotive demand.

So far the price has risen strongly this month only to be knocked back by President Obama’s comments about the banks, few seem to think that set back will be enough to slow platinum’s rise.Platinum Chart

There seems to be no end to some supporters enthusiasm Joerg Ceh, head of commodity trading at Landesbank Baden- Wuerttemberg in Stuttgart, Germany’s biggest state-owned lender is reported to have said prices could reach $2,400/ounce one wonders just what kind of a long position he is sitting on.

–Stuart Burns

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