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Thread: Platinum is Cheap !!! Who's Buying

  1. #11

  2. #12

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    I’ve just bought some platinum – here’s why

    From Dominic Frisby, across the river from the City




    Today we turn our attention to group ten of the periodic table, d-block.

    If ever there was a more gripping opening line to a Money Morning, I’d like to know what it was.

    I’m talking, of course, about the chemical element with atomic number 78.

    It gets worse, doesn’t it?

    Platinum is the sujet du jour. I bought some yesterday. I think it’s going to go up.

    Here’s why…

    “Little silver” looks as though it’s about to reverse direction

    Here’s a little discovery I made yesterday. Although platinum is today mostly produced in South Africa and Russia, it first found use in pre-Columbian South America.

    Hence the name “platinum” – it derives from the Spanish platina, which means, “little silver”.

    Don’t you just love Wikipedia?!

    Platinum was a darling of the pre-2008 commodities boom. Starting at a low of $350 an ounce in 1999, it went up, up and away, reaching a high just shy of $2,300 an ounce in 2008.

    Then it crashed hard and lost two thirds of its value. $750 was the 2008 crash low. We got a multi-year rally to $1,950, but since 2011 it has ground lower.

    It hit a low of near $800 earlier this year. It enjoyed a nice bounce to $1,200 in August, since when it has sold off quite violently to $930 earlier this month.

    Here’s a long-term chart for your perusal.

    chart

    So why am I bringing it up now? Well, I was just flicking through some charts yesterday and this one caught my eye.

    First, $930-$940 is an area where platinum has found some support in the past. Second, the selling momentum seems to be running out of steam. If you look at the Relative Strength Index (RSI), circled at the bottom of the chart below, you can see we have gone off the bottom of the scale. Third, we are about to get a “MACD (moving average convergence divergence) crossover”, also circled.

    These are all tools that some momentum traders would use to signify a change in trend. So the signs suggest that we are getting a reversal at a point where platinum has enjoyed support in the past.

    chart

    Platinum’s fundamentals look amazing – but what’s new?

    With the technical having piqued my interest, I started digging around at the fundamentals.

    Every time I look at the fundamentals for platinum – global supply versus global consumption – I think, “This can’t last.” And so it is again. The go-to research on platinum comes from metals specialist Johnson Matthey. Let’s look first at supply.

    From 2004 to 2007, global supply came in north of 6.5 million ounces a year. That figure slid to around the six million ounces mark over the next three years. Since 2012, the supply levels have slid below six million ounces – as low as 5.1 million ounces in 2014. Supply is estimated this year at 5.9 million ounces.

    Platinum demand breaks down as follows: about 40% autocatalyst; 35% jewellery; 23% industrial; and 2-3% investment. It has been north of 7.9 million ounces every year since 2005, with the exception of 2009. In 2016, it is estimated at 8.7 million ounces.

    There’s quite a big gap between supply and demand – almost three million ounces, or one third of global supply. Surely that gets you salivating. It does me. But it happens every time I look at platinum supply-demand numbers, so I’ve learnt not to get too excited.

    The difference between supply and demand is usually made up by recycling – about two million ounces or just under – and selling off existing stockpiles. Recycling is fairly constant – like mine production and demand. The stockpiles are the main variable, and it’s the above-ground supply that seems to determine the price.

    About 650,000 ounces have been de-stocked from South African miners’ inventories over the past two years. But Johnson Matthey takes the view that the destocking cannot continue at current rates.

    “On the basis that producer stock levels are now at their lowest level for many years, it is unlikely that supplies can be supplemented by significant stock withdrawals for a third consecutive year.”

    Moving forward, here are some of the other factors to consider.

    There has been no recent mining boom in platinum – no new elephant discoveries and no investments of a scale sufficient to rapidly boost global production.

    European autocatalyst demand is constant and increasing, according to Johnson Matthey. The same goes for Chinese jewellery demand. And there seems to be increasing interest from Japanese investors. Don’t know why (negative interest rates maybe?), but they bought 700,000 ounces last year – more than offsetting investor selling in the West and keeping the market in deficit.

    I seem to go through this process every year. I look at Johnson Matthey’s research and conclude the supply-demand deficit cannot continue, yet somehow it always does. So when I make the case that the current supply-demand deficit cannot continue, I do so with a heavy dose of cynicism.

    However, I like the fact that the fundamentals and the technical are both lined up nicely. That’s what persuaded me to buy some platinum yesterday.

  3. #13

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    Should have bought rhodium instead.

  4. #14

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    Quote Originally Posted by Rhodium9000 View Post
    Should have bought rhodium instead.
    Don't see why. Premiums just way to high, no matter if physical, pools, or etf's. Or, why not have some rhodium specialist who can bring this way down -- if premiums where closer to that of gold, I'm sure Rhodium would gain in popularity.
    “Of all the contrivances for cheating the laboring class of mankind, none has been more effective than that which deludes them with paper money.”Daniel Webster (1782-1852)

  5. #15

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    Quote Originally Posted by motocat View Post
    Don't see why. Premiums just way to high, no matter if physical, pools, or etf's. Or, why not have some rhodium specialist who can bring this way down -- if premiums where closer to that of gold, I'm sure Rhodium would gain in popularity.
    Why? The potential for a significant increase from current levels is certain. It's gone up $50/oz in the last week alone. I expect that we will see $1300 in the next year or so.

  6. #16

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    Quote Originally Posted by Rhodium9000 View Post
    Why? The potential for a significant increase from current levels is certain. It's gone up $50/oz in the last week alone. I expect that we will see $1300 in the next year or so.
    OK, but the buy sell spread has been $200/oz -- so even with a $50 gain, you loose $150/oz if you sell. That's just to large an amount for me to consider, and the 10K price seems like a once in a lifetime event. For these metals, I'll stick to platinum, which is also now at bargain prices. Trading Rhodium is just to expensive for small timers, and the potential upside not great enough. Platinum is also more commonly used and know, and also prettier (the Rhodium bars are ugly, and get uglier with time).
    “Of all the contrivances for cheating the laboring class of mankind, none has been more effective than that which deludes them with paper money.”Daniel Webster (1782-1852)

  7. #17
    Join Date
    Sep 2014
    Posts
    2,915

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    No, I think it will be cheaper. The next low will be the buying opportunity. If I'm wrong, oh well, I have plenty of gold and silver from Dec bottom.

  8. #18

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    Quote Originally Posted by motocat View Post
    the Rhodium bars are ugly, and get uglier with time).
    You really don't know what you are talking about here. Rhodium has extremely high reflectivity, which is why it is used in dental mirrors. Any it does not change over time, unlike silver. Rhodium bars are beautiful to look at, the mirror finish is unlike any other.

  9. #19
    Join Date
    Nov 2016
    Posts
    2

    Default Mineral platinum group

    I have a gray rock. I turn it into powder and pass it through the gas torch and it becomes a gray but brittle metal. Is platinum? It is difficult to melt. It is a little black gray. Knowing that I did not purify it with acid as aqua regia. Do you know what it is?

  10. #20
    Join Date
    Nov 2016
    Posts
    2

    Default

    I am beginning in gemology. I would like to exchange our knowledge. I see in a country that a lot of mineres. Exchange can be exceeded against gemmology tools. If you need a mineral you can discuss

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