GFMS, in its recently-published "Platinum & Palladium Survey 2011", is forecasting that platinum will sustain a gross surplus in 2011 of a similar magnitude to that of 2010. Mine production is expected to increase modestly this year, and while GFMS describes the situation in South Africa as "challenging", including risks surrounding this year's wage negotiations, the prospect of a repetition of the major disruptions of 2007 and 2008 is relatively low. The prospect of relatively buoyant prices also underpins increased supply from recycling and GFMS doubts that fabrication demand this year and keep pace with supply, let alone exceed it.
Platinum's underlying fundamentals in 2010 are described as "distinctly lacklustre" and, as above-ground stocks increased for the sixth successive year, the momentum in platinum prices was arguably almost entirely a function of investor activity. GFMS identifies 550,000 ounces of ETF investment in 2010 as well as 76,000 ounces of retail investment (although this latter is taken above the line in the supply-demand balance), but even after this investment activity the market was left in a substantial residual surplus, suggesting that non-investment inventory has grown by over a million ounces in the past ten years. This increase is the equivalent of over two months' fabrication demand and gives the lie to suggestions that the platinum market is light on inventory.
GFMS argues that the central planks of the case in favour of the precious metals sector are still intact and although the PGMs are primarily industrial metals, they have been benefiting from the factors bolstering gold investment. Indeed the case is made that investor sentiment in platinum has become increasingly influenced by the broader investment climate, and investor attitudes to gold in particular, given that one of platinum's drivers, the risk of supply disruptions and/or the economics of mine production has been broadly absent in the past two years, while the market has also been in surplus.
Palladium's price increases, by contrast, have stemmed from a better set of underlying fundamentals, both existing and prospective, with a resultant higher percentage increase in price than platinum over the past two years, and a larger absolute gain in 2010.
The Survey includes its usual in-depth analysis of all the aspects of the metals' markets and their fundamentals; there follows one interesting highlight in the shape of Chinese jewellery.
Chinese jewellery has been one of the key stories of the platinum market over the past decade. After reaching almost 1.7M ounces in 2002, Chinese demand for platinum jewellery fell to 835,000 ounces in 2006, before starting a recovery. In 2009 it was close to the 2002 record at 1.6M ounces, but fell back to 1.2M ounces last year, or 62% of world jewellery demand and 18% of world fabrication demand. This 26% fall, accompanied by a small decline in Europe, while there were marginal increases in North America, meant that, with the exception of the petroleum sector, jewellery was the only end-use where demand contracted in 2010. The increase in North American demand came largely from a recovery at the luxury end of the market, rather than an overall lift.
The Chinese market is price-sensitive and high prices accounted for a good part of last year's fall in the local jewellery sector, but GFMS also points out that the trade held high jewellery stocks at the start of 2010 and so there was little demand for any re-stocking, especially given the high price. (In fact there was little industrial re-stocking anywhere in the platinum using industries last year). The Group does underline the fact, however, that Chinese demand in 2009 was exceptionally high and that Chinese jewellery demand was, in 2010, the second-highest since 2004. Furthermore in metal value terms, demand was roughly level with that of 2009 and given that a good part of 2009 demand came from the trade's re-stocking, actual consumer expenditure was higher in 2010 than in 2009. GFMS produces an in-depth study of the sector and notes, inter alia, that after a rapid expansion in jewellery manufacture capacity towards the end of the past decade, retailers have had to cut margins in order to retain sales in the face of weakening consumer demand; one of the by-products of this has been a switch among manufacturers from PGM to gold and descries this shift to gold as "quite dramatic" in 2010.
Although prices are expected to remain high and volatile in 2011, GFMS believes that robust economic growth and a return to normalisation of inventory replenishment by the trade will result in some modest growth in Chinese platinum jewellery offtake in 2011.
GFMS is suggesting that the strength of the investment environment for the precious metals will again overpower platinum's unprepossessing fundamentals this year and that, despite the likelihood of a further significant gross surplus, prices will remain elevated. A high of $1,925 is suggested, most likely coinciding with a gold move through $1,600; while the downside is constrained to $1,675, a level that GFMS expects would be likely to attract considerable support from the jewellery market tin China, as well as renewed investment inflows.
Source
Platinum & Palladium Survey 2011 - GFMS
Diposting oleh jim | 22.21 | Commodity, Company, finance/investment, News, Palladium, Platinum | 0 komentar »Gold is still consistent scoring record
Diposting oleh jim | 12.27 | Commodity, finance/investment, Gold, market, Metals, News, Palladium, Platinum, Silver, stock | 0 komentar »Spot gold surged to the highest on Friday in thin holiday trading, hitting a record for the sixth consecutive session as the dollar weakened and a number of factors ranging from geopolitical fears of inflation uncertainty.
Silver also raced to its loftiest in 31 years, notching the milestone for a seventh straight day and outstripping gold's weekly gains by a huge margin.
The ongoing euro zone sovereign debt crisis, unrest in the Middle East and North Africa, rising global inflation, and most recently worries over the fiscal stability of the United States have fueled the record-breaking rally in these precious metals.
Spot gold rose to an record of $1,512.50 an ounce, before easing to $1,507.69 by 0853 GMT, on track for a weekly gain of 1.5 percent -- its sixth consecutive week of gains.
Spot silver hit $46.69 an ounce, its highest since 1980, on course for a weekly rise of 8.4 percent, its biggest weekly increase in two months.
Silver has gained 51 percent so far this year, and gold 6 percent. This compares with a corresponding 1 percent rise in the London Metal Exchange price of copper, the bellwether of the industrial metals complex.
Supporting precious metals, the dollar was languishing near a three-year low against a basket of currencies, and could take a run at the all-time low hit in 2008, pressured by record low interest rates and the crushing weight of the U.S. budget deficit.
So long as the overall environment stays supportive and the dollar remains weak, gold is expected to retain its strength. Price of bullion is seen to rise to $1,700 an ounce by 2015, analysts polled by Reuters said in a poll. [ID:nLDE73K0TT]
However, a correction might be on the horizon after the recent rapid ascent, traders and analysts said.
"Gold is likely to consolidate around the $1,500-level next week," said Li Ning, an analyst at Shanghai CIFCO Futures. "The angle of the recent rally is very sharp, and we are bound to see some correction in the near term."
MORE STEAM TO RUN ON?
Spot gold has rallied more than $50, or 4 percent, in the past eight sessions. The Relative Strength Index, or RSI, rose to nearly 75, a level unseen since October last year, suggesting the market has been heavily overbought.
The RSI on spot silver climbed close to near 89, its highest
since April 1987.
The gold market may have topped out, and now is the time to
sell while there are still people willing to buy, said Barry Schwartz, vice president and portfolio manager at Toronto-based wealth manager Baskin Financial Services.[ID:nN21263459]
However, Shanghai CIFCO's Li said gold has more steam to run on and expected prices to peak at $1,550 by the end of the second quarter, buoyed by the Middle East unrest, sovereign debt concerns on both sides of the Atlantic and inflation worries.
The Shanghai Gold Exchange has started a trial for over-the-counter trading, providing a convenient tool for institutional clients to trade large quantities of gold, to catch up with exploding investment demand in China.
[ID:nL3E7FM00C]
Holdings in the physically backed exchange-traded precious metals funds dipped ahead of the long Easter weekend. SPDR Gold Trust , the world's biggest gold ETF, saw holdings dip 0.6 tonnes to 1,229.643 tonnes.
Financial markets in Singapore and Hong Kong are closed on Friday for a public holiday, and Hong Kong will remain closed on Monday.
Precious metals prices 0853 GMT
Metal Last Change Pct chg YTD pct chg Volume
Spot Gold 1507.69 4.95 +0.33 6.22
Spot Silver 46.62 0.06 +0.13 51.07
Spot Platinum 1822.49 11.69 +0.65 3.11
Spot Palladium 763.00 -2.48 -0.32 -4.57
TOCOM Gold 3984.00 2.00 +0.05 6.84 622
TOCOM Platinum 4840.00 12.00 +0.25 3.07 355
TOCOM Silver 122.40 -0.50 -0.41 51.11 151
TOCOM Palladium 2026.00 -3.00 -0.15 -3.39 6
COMEX GOLD JUN1 1503.80 4.90 +0.33 5.80 112875
COMEX SILVER MAY1 46.06 1.60 +3.59 48.87 134963
Euro/Dollar 1.4565
Dollar/Yen 81.93
TOCOM prices in yen per gram. Spot prices in $ per ounce.
COMEX gold and silver contracts show the most active months
Source
Precious metals market progress over past week
Diposting oleh jim | 03.02 | Gold, market, Metals, News, Palladium, Platinum, Silver | 0 komentar »Gold surged to record highs on Friday after the dollar fell to its lowest point since late 2009 against major currencies, along with silver on the highest position in 31 years, while inflation pressures in China also helped lift bullion's appeal.
China's turbo-charged growth eased just a touch in the first quarter, while its inflation jumped to a 32-month high, putting pressure on the government to do more to rein in prices and keep the economy on an even keel. [ID:nL3E7FF0AC]
Spot gold was steady at $1,472.50 ounce by 0824 GMT, having hit a record high of $1,479.01 an ounce.
Gold is still far below its all-time inflation-adjusted high, estimated at more than $2,000 an ounce set in 1980 as a result of heightened geopolitical pressure and hyper inflation.
"We see gold peaking at $1,500 an ounce. We think there could be some more upside in gold in the short term, especially in this environment of high inflation and rising oil prices," said" Natalie Robertson, commodities strategist at ANZ.
"There is a lot more upside," said Robertson, adding that the peak of $1,500 would be reached by the end of 2011.
Dealers said worries about inflation had spurred steady physical demand from China, where the government has vowed to use all tools at its disposal, including bank reserve requirements, interest rates and the yuan's exchange rate, to wrestle inflation under control. [ID:nL3E7FD1LJ]
Gold's rise to a record only attracted light selling from Thailand and Indonesia, suggesting that investors remained bullish on the outlook. Premiums for gold bars were steady at between 70 cents and $1 an ounce in Singapore.
"Generally, higher consumer prices could still be a boost for gold. Going forward, we will be looking at inflation figures from the United States, and if we see an upside surprise, gold can even go higher," said a dealer in Singapore.
"If you look at recent price action when China announces interest rate hikes, it hasn't affected commodities that much. Also, because of the fact that gold prices are already so expensive, investors are looking at silver as a store of value."
Spot silver rose as high as $42.41 an ounce, its strongest since 1980, with physical dealers in Singapore also reporting buying from speculators.
IShares Silver Trust said its holdings edged up to 10,974.26 tonnes by April 14 from 10,969.71 tonnes on April 13. The holdings hit a record of 11,242.89 tonnes hit on April 8.
The dollar dropped to its lowest in more than a year, under pressure from expectations the U.S. Federal Reserve will not cut short its $600 billion debt-buying programme despite the recent surge in oil prices. [ID:nN14167673]
U.S. consumer price inflation numbers due at 1230 GMT will be closely watched for signs inflation may be rising faster than the Fed may expect.
U.S. gold futures for June rose as high as $1,480.5 an ounce, a lifetime high.
The Singapore Mercantile Exchange (SMX) started trading cash-settled gold futures on Friday, with the contract for June delivery opening at $1,475 an ounce on low volumes.
[ID:nL3E7FF03J]
"They need sufficient liquidity before people start looking at the contracts," said the Singapore-based dealer.
"It's always difficult to get people to adopt a new contract. You'd always stick to traditional, old benchmarks, such as COMEX gold."
Brent crude held steady above $122 a barrel on Friday after China's economic growth beat forecasts despite government efforts to cool expansion and put the brakes on inflation.
Precious metals prices 0824 GMT
Metal Last Change Pct chg YTD pct chg Volume
Spot Gold 1472.50 -0.40 -0.03 3.74
Spot Silver 41.89 -0.19 -0.45 35.74
Spot Platinum 1785.00 -1.49 -0.08 0.99
Spot Palladium 767.97 7.34 +0.96 -3.94
TOCOM Gold 3943.00 -19.00 -0.48 5.74 2430
TOCOM Platinum 4808.00 -22.00 -0.46 2.39 361
TOCOM Silver 111.90 -1.50 -1.32 38.15 175
TOCOM Palladium 2060.00 -13.00 -0.63 -1.76 40
COMEX GOLD JUN1 1473.60 1.20 +0.08 3.67 21682
COMEX SILVER MAY1 41.92 0.25 +0.60 35.47 16768
Euro/Dollar 1.4457
Dollar/Yen 83.08
TOCOM prices in yen per gram. Spot prices in $ per ounce.
COMEX gold and silver contracts show the most active months
Source
Gold and silver carve a new history
Diposting oleh jim | 23.24 | Commodity, Company, Copper, finance/investment, Gold, market, News, Palladium, Platinum, Silver, stock | 0 komentar »Gold and silver futures made history on Wednesday, with the highest value due to the position of the investors collectively take a safe position on precious metals, in addition to the weakening U.S. dollar will worsen the condition.
Gold notched a settlement and an intraday record high and set its sights on $1,500 an ounce. Silver stopped just pennies short of the psychologically important $40-an-ounce level, hitting a 31-year high on its way.
Gold for June delivery (GCM11 1,457, -1.40, -0.10%) rose $6, or 0.4%, to settle at $1,458.50 an ounce on the Comex division of the New York Mercantile Exchange.
The contract climbed as high as $1,463.70 an ounce earlier, according to a preliminary tally available at the CME Group’s website. CME owns and operates Comex.
The settlement and the intraday nominal records supplanted the previous milestones reached just the previous day.
“The geopolitical situation is going from bad to worse,” said Afshin Nabavi, head of trading at MKS Finance in Geneva. “Everybody is talking about gold at $1,500 [an ounce].
As soon as gold breached through the $1,450-$1,450 mark, fresh money came in as some investors scrambled to be part of the rally, Nabavi added.
Gold at $1,500 is certainly possible in the short term, although a more orderly, slower rise over the next month or two would be more desirable, he said.
The metal hit a record of $875 an ounce in January 1980 — the equivalent of $2,350 an ounce in today’s dollars.
In addition to ongoing fighting in Libya, where rebel forces and government forces continue to vie for the upper hand in a NATO-led military intervention, Europe’s debt crisis came back to the fore this week as Portugal appeared to get closer to asking for a bailout.
“Prices are likely to remain buoyant as risk aversion increased on the back of Moody’s downgrade of Portugal’s credit rating,” analysts at ICICI Bank wrote to clients. Moody’s Investors Service cut Portugal’s rating by one notch to Baa1 from A3 on Tuesday, saying a bailout for Portugal seemed very likely.
The focus on Portugal intensified as the country had to pay hefty yields to sell short-term bonds on Wednesday. Investors are concerned that a rescue for Portugal will also rock Spain, an economy bigger than Portugal, Ireland and Greece combined.
Portugal’s finance minister said his country will need a bailout from the European Union, according to media reports Wednesday. Finance Minister Fernando Teixeira dos Santos reportedly told the Jornal de Negocios that Portugal will need to “resort to the financing mechanisms available within the European framework.”
A finance-ministry spokeswoman confirmed the comments, according to Reuters. European Union officials, however, have yet to receive a formal bailout request from Portugal, according to The Wall Street Journal’s online edition.
Meanwhile, silver for May delivery (SIK11 3,940, +0.80, +0.02%) rose 20 cents, or 0.5%, to $39.39 an ounce — the latest in a string of 31-year highs for the metal.
Investors kept their sights on silver at $40, and some believe it would be only a short time from that to the nominal record above $50 an ounce that spot silver hit in January 1980.
The broader suite of metals were mostly stronger, with copper for May delivery (HGK11 435.70, -1.30, -0.30%) rallying 11 cents, or 2.5%, to $4.37 a pound as miner bellwether Rio Tinto PLC (RIO 72.80, -0.17, -0.23%) predicted an even tighter market for copper than most analysts expected.
Palladium and platinum diverged, however. June palladium (PAM11 787.05, +2.45, +0.31%) declined $8.50, or 1.1%, to settle at $784.60 an ounce. July platinum (PLN11 1,797, -1.30, -0.07%) added $1, or 0.1%, to $1,797.80 an ounce.
Source
Most precious metal prices rise
Diposting oleh jim | 20.55 | Commodity, finance/investment, Gold, market, News, Palladium, Platinum, Silver, stock | 0 komentar »Gold rose to within a whisker of its all-time high on Wednesday, as record low U.S. new home sales stirred talk of extended central banks' accommodative policies, and a possible collapse of Portugal's government rekindled euro zone debt worries.
Bullion rose 0.7 percent to $1,439.76 per ounce, just short of its record $1,444.40 set on March 7, rebounding over 4 percent in the last eight sessions amid safe-haven buying and ongoing Western air strikes on Libya.
"Gold rose on a culmination of further concerns about the European debt issue, coupled with the situation in Libya and very strong crude prices," said Brian Hicks, portfolio manager of U.S. Global Investors' Global Resources Fund (PSPFX.O) with about $1 billion assets under management.
Rising U.S. crude futures also stoke inflation worries on heightened political unrest in the Middle East and North Africa. Yemen's president offered to step down by year end to appease mounting demands for his resignation.
Spot gold rose 0.7 percent to $1,439.60 an ounce by 3:29 p.m. EDT (7:29 p.m. GMT).
Gold accelerated gains to hit a session high of $1,440.90, its highest since March 7, after data showed the U.S. housing market slide was deepening as new home prices fell to their weakest since 2003.
U.S. April futures settled up 0.7 percent at $1,438 an ounce. While commodity markets were mostly quiet on Wednesday, COMEX gold was one of the most actively trading markets with volume approaching 140,000 contracts.
Portfolio managers, including Hicks, said that disappointing new home sales data could lead to an extension of the Fed's $600 billion bond buying program -- dubbed QE2 because it is the second round of quantitative easing -- before it is scheduled to end in June.
"The new home sales data inspired some to think that we may not see the demise of QE2, and we are going to see money printing continue past its potential expiration at the end of June," said Mark Luschini, chief investment strategist of broker-dealer Janney Montgomery Scott with $53 billion assets under management.
"That would likely mean more stimuli and more prospect for inflation, and that's gold friendly," Luschini said.
Spot silver soared to a 31-year peak of $37.34 an ounce, surpassing its previous high set two weeks ago. It later gained 2.6 percent to $37.30 an ounce.
Year to date, silver has gained over 20 percent, and gold was up just over 1 percent. Silver was boosted by near-term supply tightness and strong industrial demand on expectations the global economy continued to recover.
FED POLICY IN FOCUS
A senior official at the U.S. Federal Reserve said the Fed must be "extremely wary" not to let price pressures take hold in the U.S. as they seem to be doing in parts of Europe.
Dallas Fed President Richard Fisher's comments highlight divisions at the U.S. central bank as its bond-buying plan is about to expire.
Gold was also bolstered by the expectation Portugal's parliament would reject the government's latest austerity measures, and that rekindled euro zone debt worries ahead of a summit of the economic bloc.
Despite gold's rally this week, the implied volatility of gold options eased to about 14 percent after it surged above 17 percent in the previous week.
Both platinum and palladium, mainly used as autocatalysts in vehicles, have come under pressure since Japan's March 11 earthquake and tsunami shut car factories in Japan.
Toyota Motor Co (7203.T) said on Wednesday it would delay the launch in Japan of two new additions to the Prius line-up, while Honda Motor Co (7267.T) on Tuesday suspended production in Japan at least until March 27.
Platinum climbed 1.4 percent to $1,756.33 an ounce and palladium gained 2 percent to $747.50.
Prices at 3:29 p.m. EDT (7:29 p.m. GMT)
Source
Platinum and Palladium Outlook
Diposting oleh jim | 23.32 | Commodity, Company, market, News, Palladium, Platinum, stock | 0 komentar »Platinum and palladium stocks started to bite again, according to RBCCM. At the PGM cherry as prices are likely to continue to rise and many current valuations look compelling.
Analysts at RBC Capital Markets believe that the current sell-off in platinum stocks – about 10% over the past week alone – offers a “second bite at the cherry with two of the ‘juiciest’ cherries looking like Aquarius Platinum and North American Palladium at present”.
RBCCM says the issues driving the sell-off “are essentially related to a belief that world economic growth is again taking a beating with rising sovereign risk in Europe and ongoing political instability in the Middle East having an unnerving impact on the price of oil and just to top it off, a large earthquake in Japan”.
RBCCM believes that this “offers an opportunity to become invested for two reasons. The first is simply that the cost base in the South African PGM (platinum group metal) industry is still escalating at rates that will require higher metal prices even if we were facing a flat demand profile. The second relates to very low valuation multiples on some of the stocks in the space – even at current metal prices flat forward”.
The second half of 2010 “delivered a sizeable increase in output”; with rising metal prices, RBCCM finds that “we now have less of the industry making negative cash flows (only about 10% versus over 25% before)”.
As much as this is a “good story”, however, says RMCCM, “one must also take note that almost half of the industry would have been making negative cash flows if the metal price basket” did not improve during the second half of 2010″. Such cash flows referred to are those expressed as including capital expenditure, increasingly known as “free cash flow”.
If the industry cost is increased hypothetically by 10% a year (seen as “easily achievable”, given power cost escalation of 25% a year and labour cost escalation at 10% a year), “a significant portion of production” will be under pressure unless the metal price increases again.
Given flat metal prices, according to RBCCM, “at least a third, but possibly as much as half of the industry, will be right back into making losses”. Again, this is on a free cash flow basis.
A “quick scan” by RBCCM “delivers a clear preference for investment into Aquarius Platinum, and North American Palladium. Beyond these, RBCCM also sees “decent value” in Lonmin, and Stillwater, while on the smaller scale, in Sylvania Resources, Anooraq, Platmin, Jubilee Platinum, and Platinum Australia.
The stocks mentioned operate in South Africa, with the exception of NA Palladium and Stillwater, which are North American. Investment risks across these companies are varied, says RBCCM with the lowest risk likely attributable to North American Palladium and Stillwater, followed by Lonmin and Aquarius with the juniors all of higher risk on average, “given the usual development problems and capital needs associated with growing juniors”.
Selected platinum stocks
Source: market data; table compiled by Barry Sergeant
Stock From From Value
Tier I platinum price high* low* USD bn
Anglo Platinum ZAR 660.50 -20.5% 9.4% 25.218
Impala Platinum ZAR 192.62 -20.9% 13.3% 17.638
Lonmin GBP 16.97 -20.6% 26.3% 5.539
Averages/total -20.7% 16.3% 48.395
Weighted averages -20.7% 12.5%
Diversified
Anglo American GBP 31.10 -10.4% 39.6% 67.354
Mvela Resources ZAR 35.00 -15.9% 20.8% 1.100
Norilsk USD 24.33 -8.6% 75.3% 46.380
Camec Now at ENRC
ARM ZAR 203.74 -13.7% 39.3% 6.281
Xstrata GBP 13.67 -13.4% 64.2% 65.369
Averages/total -12.1% 43.8% 121.115
Weighted averages -9.9% 51.2%
Tier II platinum
Stillwater USD 21.51 -16.9% 104.5% 2.198
Aquarius GBP 3.40 -30.6% 60.8% 2.541
Northam ZAR 42.00 -22.9% 7.1% 2.199
NA Palladium CAD 6.08 -23.2% 98.7% 1.014
Zimplats AUD 13.00 -22.3% 36.8% 1.411
Eastplats CAD 1.40 -29.3% 62.8% 1.271
Anooraq CAD 1.06 -41.1% 20.5% 0.220
Royal Bafokeng Platinum ZAR 60.93 -14.2% 1.2% 1.449
Averages/total -28.7% 56.1% 10.854
Weighted averages -32.8% 25.6%
* 12-month
Source
Comex gold, silver sell-off in stronger dollar, softer oil environment
Diposting oleh jim | 03.48 | Commodity, Gold, market, News, Oil, Palladium, Platinum, Silver | 0 komentar »Gold and silver on the Comex division of the New York Mercantile Exchange underwent a noteworthy correction on Thursday as the dollar strengthened, oil prices dropped and fund managers saw an opportunity to book profits.
Silver posted the biggest loss with the May contract recently off $1.167, or about 3 percent, at $34.88 an ounce in New York. On Tuesday, the grey metal touched a 31-year high of $36.55.
Meanwhile, gold futures for April delivery were down $22.50, or 1.6 percent, at $1,407.10 an ounce. Trade has ranged from $1,403 to $1,431.80.
"The metals have looked a little frothy, particularly silver. Today's sell-off is dollar oriented mostly," said Sterling Smith, an analyst with Country Hedging, who added the European currency chart is looking a little nervous due to the re-emergence of sovereign-debt worries.
The euro fell about 1 percent to 1.3788 against the dollar after Moody's downgraded Spain's credit rating to Aa2 from Aa1 and warned that additional cuts could be forthcoming. On Monday, the rating agency slashed Greece credit by three notches.
Standard Bank said in a note that the debt crisis in eurozone peripherals is moving more into the focus of market players again.
"Even so, a rate hike by the ECB in April is virtually certain although the debt crisis is rekindling. Rising interest rates will lead to higher opportunity costs for holding gold and therefore make gold less attractive for investors," the bank analysts said.
Falling crude oil prices also placed some downward pressure on the precious metals complex. Light sweet crude (WTI) oil futures on the Nymex were recently down $2.54, or about 2.5 percent, at $101.84 per barrel.
While the chaotic situation in Libya is far from resolved, the energy markets on Thursday reacted to news that China recorded an unexpected trade deficit of $7.3 billion in February - its highest in seven years.
Also of note, silver's big loss on Thursday means that the gold/silver ratio has moved to the more manageable number of 40.3:1 from 39:1 on Tuesday.
"Silver had overheated by a large amount and the gold/silver ratio had gotten out-of-whack. Although, we're still going to have to take that ratio back to 43.5-44:1 to get the precious metals back healthy again," Smith said.
"Silver is a very polarized market. We saw silver run up excessively and now we're seeing it sell-off a little bit excessively as well," Smith said.
As for the other precious metals, platinum for April delivery was down $39.60 at $1,762.40 an ounce, while the June palladium contract fell by $15.10 to $766.55 an ounce.
Source
Gold hits lows following bullish US jobs data, settles higher
Diposting oleh jim | 11.27 | Gold, market, Metals, News, Palladium, Platinum, Silver | 0 komentar »Bullion prices bottomed before settling higher in Wednesday early afternoon business, falling following positive US jobs data before dip buying emerged, although the complex remains under pressure after reports emerged that President Chavez of Venezuela was attempting to broker a peace deal in Libya.
- Spot gold struck an intraday low of $1,417.60 per ounce, retreating further from the record of $1,440.40 struck yesterday before bouncing. It was last at $1,425.65/1,426.45 per ounce, down $7.50. On the charts, having broken support at the seven-day moving average of $1,418, next levels stand at $1,417 and $1,408. Resistance is capped at $1,438, $1,440 and $1,442.
- US data showed 368,000 new unemployment claims last week, below an expected 394,000 and down from 388,000 in the previous week - this itself was reduced from 391,000. Revised non-farm productivity for the fourth quarter grew 2.6 percent, as forecast and matching the previous three-month period. Earlier the European Central Bank decided to keep interest rates on hold at one percent, despite growing inflationary fears there.
- The euro punched further gains against the dollar and rose to a new high since November 9 at 1.3969. It was last seen at 1.3943, up more than three quarters of a cent. European equities remained upbeat, rising 1.2-1.3 percent, while US futures were also pointing higher ahead of the New York opening bell.
- Among other precious metals, silver stooped to an intraday low of $34.16 per ounce before recovering to trade at $34.55/34.60, down six cents. Platinum and palladium were indicated at $1,837/1,842 and $816/821 per ounce respectively, down $9 and $2.
Source
Comex gold still down but weak US GP data lends some support
Diposting oleh jim | 10.31 | Commodity, Gold, market, News, Oil, Platinum | 0 komentar »Gold on the Comex division of the New York Mercantile Exchange regained some of its footing on Friday after slipping overnight due to easing oil prices, benefitting when US fourth-quarter GDP revision came in below expectations.
Gold futures for April delivery were recently trading down $8.20 at $1,407.60 per ounce in New York.
But it had fallen as low as $1,400.10 in electronic after-hours trade soon after oil dropped by $3 per barrel based on news that Saudi Arabia will make up for any shortages resulting from civil unrest in Libya.
"Gold is lacking direction as traders are navigating some strong cross-currents," a US-based fund manager said.
"There's now a clear consensus that [Libyan ruler] Kaddafi’s reign is far past its expiration date and should end before he has the opportunity to so something truly insane,” he said. “This, along with the Saudi's pledge to support the supply side, has allowed crude prices to stabilise and has coaxed some risk back into to the market.
But there is still some real concern that the protests could spread across the region so safe-haven is still alive and well, he added.
Additionally, Comex gold has rallied by about six percent this month and climbed within about 1.5 percent of the all-time contract high of $1,432.50, which was set on December 7.
"The air was getting pretty thin, so there's clearly some element of end-of-the-week profit-taking," the fund manager said. “We're going to experience a slight lull and may even see a mild correction before making a run towards the record in the coming days and weeks.”
Nevertheless, gold did find some support this morning after the US government revised its fourth-quarter GDP down to 2.8 percent - below a predicted 3.3 percent revision.
"Once news came out US GDP missed the mark, gold predictably firmed by a couple dollars. That news alone should allow the market to end the week above $1,400," the manager said.
In other precious metals, Comex silver for May delivery was down 32 cents at $32.86 per ounce. Trade has ranged from $32.06 to $33.13.
Platinum for April delivery on the Nymex was up $10.20 at $1,797.00 per ounce, while the March palladium contract was up $7.50 at $785.25.
Source
Anglo American Struggle
Diposting oleh jim | 10.52 | Coal, Company, finance/investment, Gold, News, Platinum | 0 komentar »Anglo American rebounded strongly during 2010, giving Cynthia Carroll, who next month will have been CEO for four years, room for cheer following the collapse of most commodity prices as 2008 stumbled on. In line with the majority of non-gold miners across the world, Anglo American’s operating cash flow halved, in this case, from USD 8.1bn in 2008 to USD 4.1bn in 2009.
During the prior “commodity supercycle” boom (which started, slowly, kicking back into gear early in 2009), Anglo American had bet big on Minas Rio’s iron ore project in Brazil. In heated bids starting in 2007, Anglo American spent USD 6.7bn in cash buying Minas Rio (including 49% of LLX Minas Rio (port of Açu)). The budget for building Minas Rio, phase 1, has escalated, and is now put at around USD 5bn; full production of 28.5m tonnes (wet basis) is set to be reached during 2014.
Anglo American
USD m 2010 2009 2008 2007 2006 2005
Free cash flow
Operating cash flow 7,727 4,087 8,065 7,264 8,310 6,781
Capital expenditure -5,280 -4,607 -5,146 -3,931 -3,686 -3,306
Free cash flow 2,447 -520 2,919 3,333 4,624 3,475
Cash on hand 6,401 3,269 2,771 3,129 3,004 3,430
Debt -13,439 -14,315 -13,995 -8,299 -6,248 -8,439
Net debt -7,038 -11,046 -11,224 -5,170 -3,244 -5,009
Dividends -302 0 -1,550 -1,538 -2,888 -1,137
Stock buybacks -64 -46 -670 -6,083 -3,663 240
Despite cash raised from ongoing disposals as Anglo American continued to restructure, net debt on the balance sheet soared from USD 3.2bn at end-2006 to USD 11.2bn at end-2008; it was largely unchanged by end-2009. Net debt at the end of 2010 was down to USD 7bn, mainly on the back of operating cash flow near doubling from USD 4.1bn in 2009 to USD 7.7bn in 2010.
The biggest contributors during 2010 were Anglo American’s iron ore and manganese division, led by subsidiary Kumba Iron Ore, which has mined at Sishen in the Northern Cape, South Africa, for more than five decades. Copper was next, mainly from Chile, and then platinum from Anglo Platinum, and then coking coal, from Australia. Over the past year, in particular, the three global stars in mining have been seaborne iron ore, copper, and coking coal.
Anglo American’s capital expenditure, a crucial indicator of corporate muscle and ambition, has run around USD 5bn a year for the past three years. The group has identified a ten-year projects pipeline that could absorb around USD 70bn in capital expenditure, doubling current group volumes.
This kind of growth, which is inevitably demanded by virtually all investors from today’s established miners, rises from a platform that Carroll has demonstrably established as competitive, safety-obsessed, and focused; overall, as she puts it, “disciplined”.
While skeptics were quick to predict a short stay for Carroll in her current job, she has shown a readiness to rise to the occasion. In South Africa, where Anglo American remains the single biggest mining company, Carroll last week told an audience at the Mining Indaba in Cape Town that “mining companies simply will not invest if they cannot be assured that the assets they create will be secure. In ignoring this truth, the false prophets who argue for nationalisation are advocating the road to ruin – a path we must not follow”.
Have other CEO voices been this strident? Carroll has also indicated her utmost trust in the South African judicial system in the highly controversial case where Kumba is suing a number of parties over the hugely disputed 21.4% stake in the mining rights at the Sishen mine.
Carroll is also highly enthusiastic over the group’s Zimele project in South Africa. This enterprise catalyst has created tens of thousands of non-mining jobs since launch in 1989, and continues to make progress against a rising wall of unemployment in the country. Carroll has confirmed that Anglo American has further committed Zimele to creating 25,000 additional non-mining jobs over the next five years.
The commitment, much talked-about at the recent World Economic Forum in Davos, has attracted much attention. The job creation target is a pledge to the Business Call to Action (BCtA), a world initiative challenging companies to apply core business expertise, technology and innovative spirit to tackle poverty, to promote growth in developing countries, and contribute to the attainment of the Millennium Development Goals (MDGs).
Anglo American is the first company from the extractive industry to have a project accepted by the BCtA. Last month, Anglo American took the unusual step of formally tieing up with a peacekeeping NGO, when the group announced with International Alert the launch of a strategic partnership to promote and implement conflict-sensitive business practice.
This is a very different Anglo American to the one launched by Ernest Oppenheimer and J.P. Morgan in 1917, when GBP 1m was raised from investors in the UK and US. Over the next decade, Anglo American would acquire control of De Beers, and start mining copper in what today is Zambia.
Some big miners
Stock From From Value
price high* low* USD bn
BHP Billiton GBP 23.88 -9.8% 42.3% 243.60
Vale USD 35.05 -5.9% 49.3% 185.37
Rio Tinto GBP 44.00 -6.7% 59.9% 147.06
Suncor CAD 44.76 0.5% 49.6% 71.22
Anglo American GBP 32.04 -7.6% 43.8% 69.80
Xstrata GBP 14.18 -10.2% 70.3% 68.18
Shenhua CNY 24.73 -19.9% 21.2% 62.03
PotashCorp CAD 60.85 -3.7% 105.9% 52.76
Barrick USD 51.34 -7.9% 43.4% 51.26
Freeport-McMoRan USD 54.41 -11.3% 93.6% 51.24
Norilsk USD 22.94 -13.8% 65.3% 43.73
Coal India INR 302.35 -15.5% 23.4% 42.24
Mosaic USD 86.08 -3.5% 128.5% 38.40
Southern Copper USD 43.11 -14.4% 68.7% 36.64
Goldcorp USD 45.24 -7.6% 27.3% 36.12
* 12-month
Source
Gold Fields build five new mines
Diposting oleh jim | 10.03 | Commodity, Company, finance/investment, Gold, News, Platinum | 0 komentar »South African gold major Gold Fields, which generated R1,2-billion of free cash flow in the final quarter of 2010, is developing five new gold mines concurrently.
Gold Fields CEO Nick Holland, who forecast gold production of from 3,5-million ounces and 3,7-million ounces in 2011 at a total cash cost of R175 000/kg, says that all five projects are advancing at the same time.
“They’re providing us with a significant opportunity to change the trajectory and quality of the Gold Fields’ portfolio,” says Holland.
The five new gold mines in the making are Yanfolila in Mali, which is expected to produce at a rate of 150 000 oz to 250 000 oz/y; Arctic Platinum in Finland, which is expected to produce at a rate of 400 000 oz/y to 600 000 oz/y of gold equivalent; Chucapaca in Peru, where 200 000 oz/y to 300 000 oz/y is envisaged; Far Southeast in the Philippines, where 500 000 oz/y to one million gold equivalent ounces a year is seen as being possible; and South Deep in South Africa, which is at an advanced construction stage, and which produced 15 kg of gold in the December quarter.
Gold Fields currently produces 3,5-million ounces a year at a total cash cost of $1 000/oz, and spends $150-million a year on exploration, which last year added 11-million resource ounces of gold to its portfolio, at the low cost of $10/oz.
“Our five-million ounce target is no longer just a strategic wish, but potentially a reality that is coming down at us very quickly,” says Holland.
Philippines’ Far Southeast deposit – the newest of the five projects situated close to the San Fernando port in Northern Lausanne – is a copper-gold porphyry, into which eight rigs are drilling angle holes to augment 180 existing holes, and where Gold Fields envisages an underground mine.
In Finland, the 12-million-ounce Arctic Platinum deposit contains gold, copper, nickel, palladium and platinum, the rising prices of which have elevated the economics of the project, thich Gold Fields has had on its books since 2003.Here, the company intends producing copper cathode rather than concentrate, which is expected to result in this project being a low cost palladium/platinum producer.
The new portfolio will be defensive against a range of long-term prices.
Holland’s key objective is to grow the portfolio without diluting shareholders by leveraging off its strong balance sheet and using its fast-flowing cash.
“The South African restructuring is significantly under way. We’ve seen some stability come into the South Africa legacy mines in the last year. We have to continue the excellent performance of our international mines,” Holland adds.
Source
Gold in the best performance since december
Diposting oleh jim | 09.15 | Commodity, Gold, market, Metals, News, Palladium, Platinum, Silver | 0 komentar »Gold rose above $1,390 an ounce on Friday, notching its best weekly performance since December, underpinned by fears over a European debt crisis, rising inflation and growing unrest in the Middle East.
Bullion’s gains sparked strong investment buying in silver, which soared to 31-year high, further widening silver’s gains over gold and sending the gold-silver ratio to its lowest level in 13 years.
“There is a big concern over the weekend that we can see some problems with the EU sovereign debt, in particular there are worries that Portugal may need a bailout very soon. Gold as a safe haven is certainly back in focus,” said Bill O’Neill, partner of commodities firm LOGIC Advisors.
The yield on five-year Portuguese government bonds hit a fresh euro lifetime high on Friday, after a euro zone source told Reuters the bloc is increasingly concerned about Portugal’s fiscal conditions and believed Lisbon will need to seek a bailout by April.
Gold also benefits as a safe haven as worries about the political stability of the region have flared this week, with unrest spreading after protests in Tunisia and Egypt unseated leaders there.
Spot gold rose 0.3 percent to $1,386.75 by 2:34 p.m. EST, having earlier hit a five-week high of $1,391.75. Bullion has risen in the five straight sessions, the longest streak since September. It gained almost 3 percent for the week.
U.S. gold futures for April delivery settled up $3.50 at $1,388.60 an ounce, with volume about 50 percent below its 30-day norm. That was in line with recent lower-than-normal turnover, a possible sign of dwindling trading interest.
Silver gained 2.1 percent to $32.42 after hitting a high of $32.86, its strongest level since 1980.
The gold/silver ratio — the number of ounces of silver needed to buy an ounce of gold — dropped to its lowest in 13 years at under 43 on Friday, Reuters data showed, as silver prices outperformed.
Silver’s rise was driven by short-term speculation and buying related to option hedging strategies, as the backdrop of an improving economy lifted the industrial metal, analysts said.
Investment demand for the largest silver-backed exchange-traded fund iShares Silver Trust has also shown signs of stabilizing after hefty outflows last month.
Barclays Capital said in a note it expects silver to continue to outperform gold, with silver trading as high as $37 an ounce.
CHINA’S TIGHTENING IGNORED
Gold initially pared gains after China said it was raising lenders’ reserve requirements by 50 basis points but remained firmly underpinned by investment interest in precious metals.
“The hike in Chinese reserve requirements has clearly taken a back seat as the investor focus has been on developments in the Middle East, especially Bahrain,” said Pradeep Unni, senior analyst at Richcomm Global Services in Dubai.
Simmering tensions across the Arab are supporting gold, as thousands in Bahrain took to the streets on Friday and funerals were expected in two Libyan towns as both countries mourned victims of government crackdowns on protesters. Anti-government protests were also reported in Yemen.
Gold buying spiked this week after data showed U.S. core consumer prices rose 0.2 percent in January, the fastest pace in more than a year, indicating a long period of slowing inflation had run its course. Earlier this week, strong Chinese core inflation had also boosted gold.
The technical picture has also sharply improved this week, with prices breaching key resistance levels, including bullion’s 50-day and 100-day moving averages, analysts said.
Platinum dropped 0.5 percent to $1,832.99 an ounce, while palladium gained 0.8 percent to $847.72, having earlier touched a 10-year high at $855.47.
Prices at 2:21 p.m. EST
LAST/ NET PCT YTD
CLOSE CHG CHG CHG US gold 1388.60 3.50 0.3% -2.3% US silver 32.296 0.726 0.0% 4.4% US platinum 1843.30 -0.70 0.0% 3.7% US palladium 857.70 14.70 1.7% 6.8%
Gold 1387.80 4.50 0.3% -2.2% Silver 32.41 0.67 2.1% 5.0% Platinum 1832.24 -10.50 -0.6% 3.6% Palladium 846.72 5.75 0.7% 5.9%
Gold Fix 1383.50 -2.00 -0.1% -1.9% Silver Fix 31.94 133.00 4.3% 4.3% Platinum Fix 1836.00 3.00 0.2% 6.1% Palladium Fix 847.00 4.00 0.5% 7.1%
Source
Zimplats: profits up 200%, increased tax liabilities
Diposting oleh jim | 08.30 | Commodity, Company, finance/investment, market, News, Platinum | 0 komentar »Zimplats, a subsidiary of South Africa’s Impala Platinum, on Friday reported a threefold profit increase and also said that it faced a $50,4-million tax bill.
The company boosted its after-tax profit to $85-million in the six months ended December, from $28-million a year earlier.
Turnover increased to $250-million in the half-year, representing a 45% increase on $172-million for the comparative period driven by a combination of higher production and improved metal prices.
However, CEO Alexander Mhembere said that operating costs for the period increased by 30% to $134-million, mainly as a result of higher production volumes, increased royalties in line with revenue and royalty rate adjustments, and an increase in labour costs following the conclusion of the 2010 wage negotiations.
“Provision was also made for amounts payable in terms of a share appreciation rights scheme that issues notional shares to senior staff that was introduced during the review period. With a significant portion of input costs denominated in South African rand, the continued strength of the currency relative to the US dollar had an adverse impact on costs,” he noted.
Further, exchange losses of $11-million were incurred, which were mainly a result of the revaluation of the rand-denominated loan.
TAX DISPUTE
Meanwhile, the platinum miner said that its additional profits tax (APT) liability had increased to $50,4-million, from the initial assessment of $23,5-million.
In a long drawn-out dispute between Zimplats and the Zimbabwean government, the miner initially faced a $23,5-million liability, which was issued by the Zimbabwe Revenue Authority (Zimra) in 2009, in respect of the period 2001 to 2007.
Zimplats paid the assessed amount in full, as the government had not promulgated the legislation to give legal effect to an exemption.
However, the audit section of Zimra reviewed the APT assessment in December and concluded that the deduction of income tax assessed losses in the derivation of net cash receipts, on which the APT is chargeable, was incorrect. Zimra has thus proceeded to issue an amended APT assessment in which they disallowed the deduction of income tax assessed losses. The effect of the disallowance is an $26,9-million increase in the APT liability.
Zimplats said that it had lodged an objection to the amended assessment and that a response was yet to be received. Should the response to the objection be negative, it was the board’s intention to seek legal redress.
MINING PERFORMED ‘WELL’
Meanwhile, both mining and processing operations performed well in the half-year, with a 23% increase in ore mined recorded on the previous year, totalling more than two-million tons, as the Bimha mine ramp-up continued.
Zimplats reported that the 2 078 000 t of ore milled was 6% above the tonnage for the same period last year, reflecting the fact that for the same period last year, the Ngezi concentrator only operated at full capacity for part of the period.
“The satisfactory milling performance was despite an 11-day unplanned shutdown at the SMC concentrator, owing to a problem on the semiautogenous grinding mill discharge end bearing, which has since been rectified,” Mhembere said.
Mill grade was in line with expectations, while concentrator recovery at 82,3% was 2% higher than the previous year, following the optimisation of processes at the new Ngezi concentrator.
4E metal production totalled 180 733 oz, a 10% increase on the previous year’s production and in line with the higher throughput and recoveries.
Mhembere noted that metal prices have continued to improve, partly reflecting improved market sentiment and also production constraints in South Africa. Accordingly, metal prices realised during the half-year were significantly higher than for the same period last year.
The development of Bimha mine remained on course with the mine scheduled to achieve design production capacity by May 2011. Implementation of the Ngezi Phase II expansion project was also proceeding according to plan.
Source
Gold surged 2.5 percent
Diposting oleh jim | 16.26 | finance/investment, Gold, market, Metals, News, Platinum, Silver | 0 komentar »Gold surged 2.5 percent on Friday, bouncing $40 per ounce off session lows as fears that unrest in Egypt will spread across the Middle East prompted investors to buy the precious metal as a safe haven.
Egypt's president Hosni Mubarak imposed a curfew and ordered troops to back up police as they struggled to control crowds who flooded the streets of Cairo and other Egyptian cities on Friday to demand that he step down.
"All things Egypt. There is a major flight to quality...a stronger dollar, and flight into bonds, flight into gold," said Frank McGhee, head precious metals trader of Integrated Brokerage Services in Chicago.
"Gold is benefiting more than bonds at this particular point. People are looking at gold as a safe haven in times like this, and it's certainly showing it," he said.
Investors often turn to gold as an insurance at the expense of paper currencies during times of political and economic uncertainties.
Spot gold rose 2.3 percent to $1,343.01 an ounce by 11:58 p.m. EST (1658 GMT), the largest one-day gain in nearly 3 months. U.S. gold futures for February delivery rose $24.7 to $1,343.10 an ounce.
The metal had touched a four-month low of $1,308.00 an ounce, having fallen 2.6 percent on Thursday on a run of firmer than expected U.S. economic data which boosted confidence in the recovery.
Gold initially weakened after data showed the U.S. economy gathered speed in the fourth quarter with the biggest gain in consumer spending in more than four years.
"Though the GDP data came in slightly below expectations... (its acceleration) was driven by two factors which are very important when looking forward, and that is the more important factor in assessing the future course of the U.S. economy," said Quantitative Commodity Research consultant Peter Fertig.
The dollar and U.S. Treasuries rose on as Egypt's protests drove investors to seek safer assets. Stocks fell around the world and crude oil prices rose.
"The market is a little sensitive when people take to the streets as it reminds them of the riots in Greece a year ago, and that did lead to a flight into the safety of U.S. Treasuries," said Chris Rupkey, chief financial economist at Bank of Tokyo/Mitsubishi UFJ in New York.
ETF INVESTMENT EASES
Investment demand for gold has been soft this year, with holdings of the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, down another 3 tonnes on Thursday.
London's ETF Securities reported a 1.3-tonne outflow from its gold exchange-traded products on the same day.
The Wall Street Journal said on Friday hedge fund SHK Asset Management liquidated a U.S. gold futures position this week valued at over $850 million, more than 10 percent of the main U.S. futures market.
Spot silver rose 3.9 percent to $27.92 an ounce. Holdings of the world's largest silver-backed ETF, the iShares Silver Trust, fell to 10,426.43 tonnes on Thursday from 10,447.70 tonnes.
Platinum climbed 1.1 percent to $1,800.99 an ounce and palladium gained 1.5 percent to $814.47.
source
One conclusion that could be reached based on a recent detailed report by RBC Capital Markets is that South Africa's platinum group metal (PGM) sector could be on the brink of paralysis. This would seem ironic, given that the country is home to the majority of global reserves of PGM metals: it supplies about 75% of the world's platinum demand, some 40% of palladium demand, and about 85% of rhodium demand.
Any disruption in supply from this base, argues RBCCM, "would have an impact on metal prices". Rampantly rising costs are key to the analysis. Cash costs (alone) are fast approaching almost USD 1,000/oz for the South African PGM industry, says RBCCM, "and with current capital expenditures seemingly pegged at some USD 300/oz, on average, for the majors, the cash break-even basket price is about USD 1,300/oz".
At this level the return on capital is negative and profitability in terms of cash flow generation is roughly zero: "but day-to-day activity continues". The prevailing "basket metal price" is just above USD 1,450/oz. The "break-even" basket price of USD 1,300/oz needs to increase, argues RBCCM, to at least USD 1,700/oz "to even start to justify capital investment".
However, at current exchange rates, continues RBCCM, "this level pretty much approaches our current metal price forecast, peaking at USD 1,850/oz or ZAR 13,000/oz. ... Houston, we may have an even bigger problem".
Looking at the global canvas, RBCCM believes the PGM market "is lining up for an exceptional three years as far as potential for higher metal prices are concerned".
RBCCM continues to see big problems developing in the South African supply base - "driven off low levels of profitability (due to extreme cost pressures from labour and electricity, compounded by a strong currency) that severely limit free cash flow for expansion".
The inability to expand meaningfully is seen as "further compounded" by the high probability of an electricity shortage over the next three years, and high capital required just to maintain current output as mines go deeper on the Western Limb of the Bushveld Complex. This requires refrigeration, which adds at least 30% to the unit cost per ton.
RBCCM finds that some 40% of the current South African PGM production base could be cash-flow negative at current (very high) spot metal prices: "Even in a rather uninspiring demand scenario, one would have to assume that such a squeeze on profitability and the likelihood of further mine closures would more than likely see the metal prices move higher, sooner rather than later".
RBCCM sees the global auto market continuing to improve (on the assumption that Asia does not "trip up" and that at least some growth returns to Western economies) while the Chinese, in particular, are expected to continue spending ever larger amounts on PGM jewelry. In particular, RBCCM does not see investment demand coming off in the face of the problems in the South African supply base.
RBCCM also expects to see "market interference by either China or the West". The assumption is based on the potential that problems in South Africa, plus an improving global auto market, could lead to a shortage of metal (palladium, in particular) and that the need to secure supply (regardless of price) could well see different auto production camps start to look at stockpiling some metal.
It has been noted that General Motors signed a metal offtake contract with Stillwater Mining in late December 2010, securing specific amounts of palladium, without locking in a price. This is seen as being "all about security of supply".
RBCCM concludes with the recommendation "Buy Palladium And Buy Outside South Africa". Stillwater Mining and NA Palladium are seen as offering the best exposure "without most of the risk associated with the large production base in South Africa".
If investing in those markets is not possible, the best of the rest have presences in South Africa: Aquarius Platinum, Lonmin, and Platinum Australia.
Selected platinum stocks
Source: market data; table compiled by Barry Sergeant
Tier I platinum
Anglo Platinum
Impala Platinum
Lonmin
Averages/total
Weighted averages
Diversified
Anglo American
Mvela Resources
Norilsk
Camec
ARM
Xstrata
Averages/total
Weighted averages
Tier II platinum
Stillwater
Aquarius
Northam
NA Palladium
Zimplats
Eastplats
Anooraq
Royal Bafokeng
Averages/total
Weighted averages
* 12-month
Source: market data; table compiled by Barry Sergeant
Developers and explorers
Platmin
Wesizwe
Noront Resources
Goldbrook Ventures
Platinum Australia
Eurasia Mining
Sylvania
Starfield
Ridge
PGM
Solitario
Colossus Minerals
Jubilee
Nkwe
Bauba Platinum
Platfields
Caledonia
Duluth Metals
Franconia Minerals
Great Australian
Avalon Rare Metals
Eurasia Mining
Largo Resources
Macdonald Mines
Hard Creek
Polymet
MetalCORP
Wallbridge
Benton Resources
Mustang Minerals
Northern Shield
Platina
Darnley Bay
Pacific NW Cap.
Platfields
Huston Lake
Goldplat
Village Main
Premium Exp.
Blackthorn Resources
Silvermet
Andulela
Developer averages/total
Weighted averages
Overall averages/total
Overall weighted averages
* 12-month
source
