Is Platinum on the Rise?

Jeffrey Christian: Longer term, we’re looking for South African mine production to decline, maybe three years from now, maybe sooner, maybe later than three years. When that happens, you could see tighter platinum supplies. If you’re coming out of a recession and auto production is rising at the same time, South African mine production is falling. You could see platinum and palladium prices rise significantly out of that $800 to $1,000 range. So, it kind of is at a level that longer-term investors would say this is a good accumulation place.

Narrator:

Silver Lining in Radical Times with Monex and CPM Group.

Sean Brazney: Hello, my name is Sean Brazney, Sales Director for Monex Deposit Company. The great pleasure of being here today with Jeffrey Christian, Managing Member, Founder of CPM Group, one of the many wonderful analysts over there, CPM Group. Thank you for being with us today Jeffrey.

Jeffrey Christian:Always a pleasure, Sean.

Sean Brazney: One of the things that doesn’t get talked about a lot is the PGMs, the other wide metals. We’ve been in a kind of a downtrend since February of ’21. Well, in January it broke out of that downtrend and looks like we’re back up and over a $1,000, and I get a little excited like it can go on a run here, but I’m really curious as to what your data shows on a couple issues with platinum. One is, how do you think tariffs might affect platinum, and the PGMs as a whole, and also the war in Ukraine? If it’s a prolonged war or if there’s actually some kind of a ceasefire or a settlement, what do you think that might do to the PGMs?

Jeffrey Christian: Well, in terms of the tariffs, they haven’t really applied the platinum and palladium directly. They have limited the cash available to Norilsk, which is the big large Russian producer of platinum group metals, and the inflow of material that Norilsk needs to mine. So, there has been some impact on production and sales, I guess from Russia by due to the war and the sanctions applied to Russia. If you got a settlement, those sanctions would be relaxed and you could see some increased flow of metal out of the country, as Russia and Norilsk look to generate foreign exchange to pay for imports and such. Also, you’d see investors sort of probably selling some platinum palladium in the expectation of increased supplies. If the war gets prolonged, then you’re in a current situation that you are in now.

In terms of the tariffs, we don’t think they’ll apply to platinum and palladium, because platinum and palladium are so critical to the US auto industry it would be really destructive to apply tariffs to them then. Of course, it’s destructive to apply tariffs to everything. One of the things that we know, is there’s a tremendous number of auto parts that are manufactured in Canada, Mexico, and China that are imported into the United States and used in automobiles manufactured in the United States. So, we’re a little bit worried that that could reduce auto production in the United States, as well as elsewhere, and we’re also worried that overall sanctions are negative for economic activity. They tend to restrict economic growth and they tend to be inflationary, both of which could hurt auto sales, which would then reduce auto production.

So, we’re a little bit concerned about the tariffs and we’re also hopeful that there is some sort of resolution to the Ukraine war, but it’s hard to say how that’s going to be. The Trump administration has had great vacillation in what it says about the Ukraine war and the Russian invasion. We just have to wait and see how that all shakes out. We have to see what NATO does and what Western Europe does, as well as Ukraine. Quite frankly, if the US were to back away from supporting Ukraine, that sort of frees up Western Europe and Ukraine to get rid of some of the constraints that the US government has imposed on the Ukraine using some of these weapons. So, you could actually see the US backing away trying to broker a peace with Putin, which is what Trump said today, and that could actually lead to a more effective war prosecution on the part of the Ukrainian army. So, it’s just up in the air.

In terms of platinum and palladium, yeah, the price has been trading mostly between $800 and $1,000 since about 2015, and it’s had since 2020-2021, it’s had like two or three breakouts over a $1,000 and it’s broken out above a $1,000 again, as you said you know it’s $1,048 as we speak. You could see the price rise some more as people try to assess what is going to happen economically and politically. Our view is that the price could stay in that $800 to $1,100 range for a few years.

Longer term, we’re looking for South African mine production to decline, maybe three years from now, maybe sooner, maybe later than three years, and when that happens you could see tighter platinum supplies. If you’re coming out of a recession and auto production is rising at the same time South African mine production is falling, you could see platinum and palladium prices rise significantly out of that $800 to a $1,000 dollar range. So, it kind of is at a level that longer-term investors would say this is a good accumulation place.

Sean Brazney: I just want to remind our viewers that when you’re done accumulating platinum down here under a $1,000 and under $900 if you get the chance, we’ll look forward to that future catalyst that finally gives us that longer-term breakout, but in the meantime call Monex today, talk to an account representative, and get your free report today.

Thanks for being with us Jeffrey.