Are there now opportunities in precious metals beyond just gold and silver?
*Barron's, by Simon Constable, March 19, 2012:
''Here's something to put a shine in your portfolio: Palladium, the
often-overshadowed cousin of the precious metal platinum, is poised to
gleam brilliantly.
Thanks to both rising demand and sketchy supply, some analysts are
looking for a 20% jump in futures prices this year, with continued
growth through 2014.
'We are most bullish on palladium among all the precious metals,' says
Rohit Savant, a senior commodity analyst at New York-based consulting
company CPM Group.
The diminutive size of the market means that even small changes in
production or use have a real impact on prices. Fewer than 10
million ounces of the palladium hit the market in 2011, compared with
127 million ounces of gold, according to CPM.
Demand for the metal should swell, as the global market for cars and
trucks picks up. Around half of all palladium production goes
into making catalytic converters, which scrub toxic chemicals from
motor exhaust.
'Palladium is now being used in every auto-catalyst produced,' says
CPM's Savant.
Savant sees 5.05 million ounces of palladium going to catalysts in
2012, up from 4.7 million last year. He also forecasts steady use
in electronics, ticking up to 1.3 million ounces this year from 1.2
million last year.
As demand shines brightly, supply is cloudy at best.
Palladium primarily comes from South Africa and Russia, accounting for
33% and 30% of total supply, respectively, according to CPM's
data. But each country has problems.
South Africa faces continuing political unrest, production stoppages
due to safety issues and electricity-supply problems -- all of which
could interrupt mining, says Matthew Turner, a strategist at Mitsubishi
Corp. International in London.
Russia has steadily fed palladium to the market for decades, through
sales of state stockpiles.
This seems to have come to an end. 'That may be because there is
none left, or because they have reached a level the government is
content to keep,' says Turner. The truth is murky.
CPM's Savant sees palladium futures prices soaring to $850 a troy ounce
in the fourth quarter, and averaging $772 in 2013. Mitsubishi's
Turner predicts that $1,000 in 2013 or 2014 is possible.
The most actively traded palladium futures settled Friday at $701.70
down 1.2% for the week on the New York Mercantile Exchange.
Of course, all bets are off if the global economic recovery falters and
demand for cars falls. Likewise, lack of supply constraints could
take the luster off any rally.
But if you are still game, you might burnish your portfolio through
Bullion-grade palladium coins, like those produced by the Royal
Canadian Mint. Bullion coins are sold solely on the basis of
their metal content, rather than their finish. Be careful with
how much of a premium you pay over spot prices. You also need to
worry about safely storing the coins.''
*This information is solely a highlight of the opinion of a third-party publication and is incomplete. Please subscribe to this publication for the full and timely opinion of the author and call a Monex Account Representative for any additional up-to-date information. This is not an offer to buy or sell precious metals. Investors should obtain advice based on their own individual circumstances and understand the risk before making any investment decision.
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