Gulf News, in its November 19, 2012 article, reports that There are Four things to know about palladium.
Extract :
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What?
Palladium is part of the platinum group metals that is
used extensively in manufacturing. It has a reasonable strong correlation to platinum
but also other precious metals such as gold and silver. Its price during the
last couple of months has primarily been driven by the movement in gold and
platinum. At the start of October the metal was trading at $630, but by the
end of the month it had fallen to $595. Early November saw it above the $600
mark, but last week it jumped by seven per cent in a day between Tuesday and
Wednesday.
Why?
According to Ole Hansen, head of commodity strategy at Saxo Bank: “The unilateral spike was triggered by
Johnson Matthey, a world leader in platinum distribution, who in their 2012
interim review for palladium projected a shortfall of 915,000 ounces for 2012
due to lower mine supply, less Russian stock sales and record auto catalytic
demand.
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“While platinum is very dependent on mine supply from
South Africa, palladiums biggest single source of supply for many years has
been from the release of stocks accumulated by the former Soviet Union. These
reserves, whose numbers have never been released, are dwindling and could be
gone within a few years, leaving mining and scrap as the two main sources of
supply.”
What’s next?
Hansen believes the market will
continue to focus on the supply deficit, but whether this will result in an better performance than platinum remains to be seen.
“Palladium is the least traded of the two and often suffers from lack
of investor interest due to its illiquidity and ability to trigger sharp
price moves in both directions. It remains the worst performing metal this
year as its down five percent compared to minus two per cent for copper and
plus 10 percent on platinum,” he added.
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