Tag Archives: platinum

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Stocks Rally, Gold Extends Gains As Fed Calms Rate Concerns

Here’s today’s ‘Just A Minute’ bringing you a 60 second summary of what’s happening in the financial markets:

Main Trading Event Of The Day: USD Unemployment Claims @ 12.30 GMT

WHAT WE’RE WATCHING TODAY

Stocks Rally, Gold Extends Gains As Fed Calms Rate Concerns

U.S. stocks jumped on Wednesday after the Federal Reserve played down forecasts by some of its own policy makers that interest rates might rise faster than they previously predicted. Even after rates rise, officials said last month, they might have to be kept at levels considered below normal for longer because of tighter credit, higher savings and slower growth in potential output.

Gold, meanwhile, extended gains to a third session on Thursday, reaching two-week highs. This follows the Federal Reserve’s decision not to increase interest rates any time soon. Gold prices came under pressure last month after Fed Chair Janet Yellen said the U.S. central bank would probably end its massive bond-buying program this fall and could start raising interest rates around six months later.

GBP/USD Remains Near 1-Month Highs

The pound remained near one-month highs against the U.S. dollar on Wednesday, as demand for sterling remained supported by data showing that the U.K. trade deficit narrowed more-than-expected in February. GBP/USD hit 1.6765, the pair’s highest since March 7. The pound remained supported after the U.K. trade deficit narrowed to £9.09 billion from a downwardly revised deficit of £9.46 billion in January. Analysts had expected the trade deficit to shrink to £9.20 billion. Exports in February fell by 1.6% to £23.547 billion, lowest since November 2010, while imports were down 2.2% to £32.641 billion, the lowest since April 2011. The data came one day after the International Monetary Fund upgraded the U.K. growth forecast for this year. The fund nevertheless expects the U.K. economy to expand by 2.9% in 2014, up from a previous forecast of 2.5% in January. The pound also strengthened after upbeat U.K. industrial production data on Tuesday boosted the outlook for the wider recovery and fuelled expectations that the Bank of England may raise interest rates sooner.

gbp

Palladium & Platinum See Price Increases

Palladium prices are on the up having seen a 7-percent jump in futures prices year-to-date with analysts seeing a further upside for the commodity, thanks to squeezed supply and growing automobile demand. Currently trading around $782 per ounce, palladium is mainly produced in South Africa and Russia. Ongoing strikes by miners in South Africa and unresolved tension surrounding sanctions on Russia could drive up the prices by triggering supply constraints. If the situation with Russia intensifies or if there is a supply disruption, analysts predict that the price could reach $950 or more. Palladium isn’t the only standout among the metals. Traders are also bullish on platinum, a precious metal also in high demand for industrial use. South Africa produces 70 percent of the metal, and there is far less exposure to Russia. Platinum futures are up nearly 5 percent year-to-date, and were recently trading at $1,441 an ounce. Analysts project a sharp price increase in the prices of both platinum and palladium metals over the next four years and a more stagnant movement for gold, silver and copper.

That sums up today’s highlights! We hope you have a profitable day on the markets.

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morning-coffee

Are Facebook And Unemployment Correlated?

In this industry, correlations are something we are very familiar with. For instance platinum follows the same trend as the CRB (commodities) index which has nothing to do with platinum yet, where it goes, platinum goes and that has been the case for years. In a similar way, there’s an inverse correlation with gold and the USD - when one goes up the other tends to go down.

Step into the internet world and you can find another example of, in this instance, a rather unusual correlation: Facebook and unemployment. You may be surprised to learn that the unemployment rate is more correlated with Google searches for “Facebook” than with any other search term!

It is a well known fact that some companies and industries do especially well in tough times and Facebook is one of them. Google’s Correlate finds search patterns which correspond with real-world trends. If you enter a query into the search box, it will give you search terms that have a similar pattern of activity. The tool also works the other way so that you upload your own data, and see what search terms line up. If you upload actual unemployment rate data to see what search patterns correlate most closely, Facebook searches dominate. Higher unemployment translates to more Facebook searches, and lower unemployment means fewer Facebook searches. They are so closely tied to unemployment, they outnumber searches involving actual unemployment-related topics!

It may seem reasonable to suggest that more unemployed people spend more time surfing the internet, either to pass their time or to connect with people who might help them find a job, but it is still surprising that Facebook is by a long way, the most correlated search. There doesn’t seem to be any other logical explanation for this occurrence and Facebook has not, as yet, provided any hard data as to why this is happening. Our explanation? Don’t ask us - we’re too busy working!

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morning-coffee

The Future’s Bright…The Future’s Platinum

Platinum hasn’t been in the news much lately, yet global demand has hit record levels amid dwindling supply. With its price now sitting below its cost of production, pointing to further supply shortages, is there a case for buying platinum?

There is currently a record demand for platinum with a record of 8.4 million ounces needed this year. Just over three million ounces of that is needed by the car industry for catalytic converters and a further 2.75 million needed for jewellery. Demand has been steadily growing since 2009. Yet the platinum price has been steadily falling since mid-2011, when it hovered briefly around the $2,000 mark.

You may be excused for thinking that there has been an increase in supply but that isn’t the case. World platinum mine supply was fairly constant from 2007 to 2011, ranging between 5.9 million and 6.6 million ounces. But in 2012, that fell to 5.7 million and it hasn’t rebounded.

Around 75% of global platinum supply comes from South Africa, where production has been falling since 2011. Add in the cost of building the mine and compound deficits over time, platinum mining becomes a very expensive loss-making exercise. A mine can only lose money for so long before it gets shut down. At least four have closed this year already and now only higher-grade, more profitable rock is being mined pointing to further supply falls in the future.

South African platinum production therefore looks fragile as does the other main producer, Russia, where production has also fallen. In addition, the ratio of gold to platinum, low by historic standards is almost 1:1 just now i.e platinum costs about the same as gold. It’s not unusual for platinum to cost twice as much as gold.

Nevertheless, according to reports, the demand-supply deficit will grow as the above-ground stock will run out and the platinum price will rocket. So why has the price been falling in the face of such bullish fundamentals?

Historically, platinum tends to follow the same trend as the CRB index, following the same direction almost all of the time. The CRB is about 75% weighted to energy, grains, meats and softs, things that have nothing to do with platinum. Yet, where it goes, platinum goes and that has been the case for years. Commodities are in a bear market i.e. trending down and nobody knows when this will end but there is quite clearly a set-up for a supply squeeze and higher prices. The question is when? Platinum’s time will almost certainly come again, possibly sooner rather than later. Its future’s looking bright…

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Platinum

Platinum and Palladium Predicted Best Performing

Record global car sales will keep platinum and palladium in high demand and short supply for the third year in a row, according to forecasters.

The prediction marks the longest stretch of shortage for the metals, which are used as catalytic converters, since 2005 for platinum and 2000 for palladium. Platinum is expected to gain 13 percentage to average $1,635 an ounce by the fourth quarter of next year. Palladium is predicted to gain 10.3 percent to average $823 an ounce, its highest for a quarter since 2001.

Unlike gold and silver that have slumped 20 percent or more as investors lose faith in them as a commodity of value, the market is bullish on platinum and palladium. Although metal stockpiles are diminishing as mining companies have difficulties in keeping up with current demand, car sales growth is projected to increase to 4.8 percent in 2014 from 2.7 percent this year.

It is expected, however, that improving mine output will decrease shortages. The platinum deficit is projected to decline 59 percent to 239,000 ounces and that in palladium to narrow 16 percent to 686,000 ounces, according to Barclays. Primary supply will expand 0.4 percent for palladium and 2.1 percent for platinum, the bank says. Should mines be disrupted by strikes or natural disasters, there exist stockpiles that can be tapped. This year, about 80,000 ounces of platinum was lost to such events.

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