Platinum and palladium outshined the precious metals complex Wednesday, rallying for a seventh day straight as the world's largest platinum miner in South Africa said it would shut down two mines and lay off 14,000 workers in a labor dispute.
Anglo American Platinum's move intensifies a shortfall already expected from strong auto sales, for which the metals are used in emission-control devices.
In the futures markets, platinum prices rose 0.54% to $1,696 an ounce, besting gold by $5 an ounce. ETFS Physical Platinum Shares (PPLT), the most widely traded ETF tracking the white metal, added 0.24% to 165.89, a three-month high.
PPLT ended 2.5% above a 162.93 buy point in a 15-week-long double-bottom base. It trades above both its 50- and 200-day moving averages, indicative of a strong uptrend.
Its IBD Accumulation-Distribution Rating of B, on an A-to-E scale with A being highest, shows institutions are heavily buying shares and selling little. Its Relative Strength Rating of 61 means its price action has outpaced 61% of the market the past 12 months.
Palladium, mined alongside platinum and commonly used as a cheaper substitute, popped 2.12% to $729 an ounce. ETFS Physical Palladium Shares (PALL) surged 2.22% to 71.26, an 11-month high. It sports a superior IBD RS and Acc-Dis Ratings combination of 71 and B+, indicating a strong uptrend.
It ended the session just above a 70.72 buy point in an 11-month-long cup-with-handle base.
However, PALL faces overhead price resistance at its February 2012 high of 71.66. Terry Sacka, chief strategist at Cornerstone Asset Metals in Palm Beach Gardens, Fla., recommends waiting for it to break above that level before making additional buys.
"I believe the rally is only sustainable if the debt ceiling is resolved and the other metals begin to rally as well," Sacka said in an email.
Goldman Sachs said palladium, copper and metallurgical coal are its top mining commodities for 2013 in a "Commodities Research" report released Wednesday.
Palladium traded at an average price of $646 an ounce in 2012. Goldman's analysts project the average price will climb 21% to $781 in 2013. They set price targets of $925 for 2014 and $1,000 for 2015.
"Production cuts (of about 150,000 ounces) in South Africa by Anglo American and the lack of a supply response from Russia or North America is expected to result in a deficit over the short-to-medium term, even allowing significant ongoing sales from Russian stocks," Christian Lelong, an analyst at Goldman Sachs, and his colleagues wrote.
They believe palladium demand will grow, thanks to higher demand for autos in China and the U.S. In addition, technological improvements allow automakers to substitute palladium for platinum in diesel cars, and European emissions regulations are prompting automakers to produce more gas-burning cars instead of diesel.
Gasoline autocatalysts use either platinum or palladium, while diesel engines use mainly platinum and require five to 10 times as much of the material.
But as palladium prices rise, more old autocatalysts will be recycled, says Miguel Perez-Santalla, vice president of business development at BullionVault. "With all the old catalyst reclamation, palladium supply should not be a problem," he said in an email.
Source: http://news.investors.com/investing-etfs/011613-640873-palladium-platinum-outshine-gold-silver.htm
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