Platinum Price Reservations

January 24, 2010 | By | Reply More

Our reservations concerning the Platinum price became firmer as last week progressed. Given that US investors in general have had the opportunity to play the platinum market in earnest for the first time, it is not surprising that since the launch of the platinum ETF (PPLT-NYSE) the week before last met with such enthusiastic buying.

After all it made a change from the gold and silver plays that have been exercising the minds of precious metal aficionados for so long.

With the sharp stock market fall by the end of the week, platinum, along with gold and silver, was dragged down in sympathy. Hardly surprising, but the real concern that we have is the mounting evidence that this recession is far from over and that there is a possibility, even a probability, that China will be putting the brakes on with increasing severity as the months pass by.

Why is this bad for platinum and yet in all likelihood boosting the lure of gold and silver? Simply for these three reasons, the first because platinum’s main industrial usage is in automotive exhausts, secondly it is not universally considered as a store of value and a hedge against inflation, unlike gold and silver, and lastly, very little is used up as virtually all its uses are either as a catalyst or in jewelry, meaning that it is virtually 100% recyclable.

Since we bought the July Silver $20 call at $0.95 last Thursday we topped up again on Friday at a remarkable $0.55, a price we could not resist. Fingers crossed that we have got it right!

This week we will be looking very closely at buying Platinum ETF puts, a cheap and controllable way of going short on the metal. Much will depend on how the markets open on Monday, if the sense is that the recession is here to stay for the time being and that the euphoria promoted by the Fed, bankers and Wall St. is at last recognized as a cruel deception then that will be our deal of the week.

If the market recovers some of its recent losses then we will hold our fire.

In the melting pot will be the news out of China.
Exciting times ahead!!!

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Category: Platinum Group Metals

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