Watching PGMs Continue To Record All Time Highs

February 18, 2008 | By | Reply More

Lets start the coming week off with platinum as it continues to record all time highs. After finishing off last week at over $2000 an ounce, Monday morning trading on the Tokyo Commodity Exchange saw yet another peak reached as South Africa’s energy woes continue to hit supply expectations.

In New York spot platinum reached $2070 by Fridays close. With the demand in 2008 looking to almost double the 2007 deficit of over 250,000 ounces it seems unlikely that any bouts of profit taking will prove no more than a blip in the upward trend in the metals price.

At the same time rhodium and palladium, important by products in platinum and nickel production and essential with platinum in catalytic converters are also seeing their demand leading to record highs.

Meanwhile gold hovered around the $900 – 910 an ounce mark despite prospects of further (panic stricken!) US interest rate cuts.

It seems unlikely that the International Monetary Fund’s declared intention of wanting to sell 400 tonnes of the yellow metal will have any serious consequences for its continuing bull run.

In the first place the US can veto the sale as it has done in the past and in the second the tonnage is likely to be quickly absorbed by, in particular, the gulf oil states, and other parties who see gold as the safe alternative to depreciating fiat currencies – meaning the greenback!

For the technically minded, gold’s chart indicates that it is going through a period of consolidation not unlike the latter part of 2007 when it was trading circa $800. Bearing in mind that there are a number of fundamental issues that should push the price along, such as declining output from South Africa, hedging against the gathering clouds of inflation, and lack of confidence in the West’s paper currencies and more, it should not be a surprise that the charts also look promising.

Finishing of with uranium it is worth mentioning that plans for new nuclear power plants seem to be gathering pace as the developed as well as the developing countries face up to the realities of burning fossil fuels.

Even the UK with its entrenched green lobby has at long last decided that nuclear is the only way to go, although possibly the issue was determined by the vested interests of Britain’s ruling labor class, their dependents and close friends!

As these plants come on line throughout the world so the demand for uranium will soar. Wise governments of forward-looking countries will and are stockpiling yellow cake in anticipation of their future needs.

Although there is reported frenetic activity amongst the proliferating uranium prospecting junior mining companies be very aware that few will meet with any success, so our advice is to approach with caution. We note that Rio Tinto is proposing to double its uranium production over the next few years, that should give food for thought.

Unlike the uncertainty surrounding stock markets in general, the outlook for precious metals and uranium looks exciting with promising times still to come, as an aside we also like the look of the agricultural sector.

If you have time to spare it could be a profitable exercise to research hard and soft commodities and leave the traditional stock market sectors for another day. May good fortune smile on your endeavors.


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