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Platinum to palladium shortages seen persisting

Platinum demand will outpace supply by 1.13 million ounces this year and palladium’s deficit will be 1.62 million ounces.

Platinum and palladium supply probably will fall short of demand for a fourth year in 2015 as more usage in vehicles helps compensate for rebounding South African mine output, according to Johnson Matthey Plc.
Platinum demand will outpace supply by 1.13 million ounces this year and palladium’s deficit will be 1.62 million ounces, according to a presentation of London-based Johnson Matthey’s platinum-group metals report. They would be the biggest shortfalls ever, based on data going back more than three decades for the metals.
A five-month mine strike that ended in June cut output from South Africa, the largest platinum producer and second-biggest for palladium. Supply shortages should continue next year partly as car demand strengthens in North America and China and stricter legislation requires more of the metals to be used in devices that curb harmful emissions.
“All things being equal, we would expect to see a good bounce back in South African supplies for both platinum and palladium,” Rupen Raithatha, research manager at Johnson Matthey, said by phone from Royston, England before the company presented the data today. “The auto side is going to be good.”South African platinum output will fall 18 percent this year to 3.46 million ounces, the least since 1996, the company’s data show. While producers lost about 1.3 million ounces from the stoppages, the impact was limited because they drew about 450,000 ounces from stockpiles, Johnson Matthey estimates. “Notwithstanding a significant sell-off in the investment market, the market should remain in deficit next year,” it said in the presentation.
Global palladium output slid 5.7 percent, partly due also to the end of sales from Russian state stockpiles, it said. Next year’s shortage is likely to remain “substantial,” the company said.

Metal Prices

Platinum prices still fell this year as concerns about slowing economies outside the U.S. and the dollar’s rally curbed commodities demand. The metal is favored in diesel vehicles used more in Europe. Palladium is mostly used in gasoline models that are more popular in the U.S. and China. Johnson Matthey makes about one in three of the world’s catalytic converters.
Platinum for immediate delivery declined 11 percent this year to $1,220.25 an ounce in London. It reached a five-year low of $1,178.75 on Nov. 14. Palladium has gained 10 percent since the end of December to $790.38 an ounce.
Platinum’s expected deficit this year compares with 901,000 ounces last year, while palladium’s 2013 shortage was 386,000 ounces. Johnson Matthey’s outlook report in May had pegged the 2014 platinum shortfall at 1.22 million ounces and 1.61 million ounces for palladium.

Vehicle Usage

Car companies’ platinum usage will climb 7.9 percent to a six-year high of 3.39 million ounces this year, and there will be “broad-based growth” next year, Johnson Matthey estimates. Palladium auto usage will gain 4.9 percent this year to a record 7.3 million ounces. While that demand will rise next year, it will likely be at a slower pace, the company predicted.
“In Europe, we’ve got some new legislation that has come in, and that’s going to lead to higher loadings in vehicles,” Raithatha said. “In the palladium auto market, it’s really driven by China and North America.”
Recycling, a source of supply, should increase in 2015 as metal is recovered from old cars that had higher loadings of the materials, Johnson Matthey forecasts. It sees scrapping rising 13 percent to 2.28 million ounces this year for platinum and 6.3 percent for palladium.

Investor Holdings

Jewelry consumption will slip 1.5 percent to 2.98 million ounces for platinum this year and fall 16 percent to 300,000 ounces for palladium, the least since 2003, the presentation showed. Demand for palladium items may fall further next year on fewer purchases in China, where there’s been a lack of marketing, Raithatha said.
Johnson Matthey sees platinum investment purchases slowing 66 percent to 300,000 ounces this year, while palladium investment of 837,000 ounces will compare with sales of 8,000 ounces in 2013.
The 83.2 metric tons now held in platinum exchange-traded products is within 7 percent of the record set in July, data compiled by Bloomberg show. Investors own 93 tons of palladium through ETPs, 3 percent below the all-time high set in August.
Rhodium’s shortage will expand to a record 86,000 ounces from 35,000 ounces in 2013, the company expects. Gross demand for the metal, mainly used in catalytic converters and also in the chemical and glass industries, will increase 1.9 percent while supply falls 11 percent this year.
Supply and demand will be “closer to balance” next year, Raithatha said. The metal climbed 24 percent to $1,210 an ounce this year, according to Johnson Matthey prices on Bloomberg.
To contact the reporter on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net
To contact the editors responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net
©2014 Bloomberg News

Peter Schiff's Message to Switzerland: Save Your Currency and Your Country

Peter Schiff appeals to the Swiss people to vote "yes" on the Save Our Swiss Gold initiative on November 30th.

Jim Rogers on Russia, US equities and commodities & Middleton on banks

Our lead story today is surveillance and the US economy. At a hearing in Palo Alto, California on Wednesday, Google’s Eric Schmidt made the bold claim that with the backlash against government surveillance mounting, “the simplest outcome is we’re going to end up breaking the internet. Erin Ade reports.

Then, Erin is joined by Veritaseum CEO Reggie Middleton to discuss bank security and the technology of finance. After JPMorgan Chase recently announced it had a breach involving some tens of million accounts, it is clear that financial services are vulnerable. Moreover, a lot of bank profit comes from fees these days, rather than interest income. Is that fee franchise under pressure? Middleton weighs in.

After the break, Erin sits down with famed investor Jim Rogers to talk about Russia, agriculture, and China. Rogers is bullish on agriculture and likes China. But he sees the Chinese purchase of the Waldorf-Astoria hotel as a top of the market kind of “trophy” acquisition. Jim also comments on whether a US equity bear market is on the horizon.

And in The Big Deal, Erin and Edward Harrison discuss the end of the bull market. Market breadth is waning as evidenced by the lower number of stocks hitting new highs and trading above their 200-day moving averages. Small cap stocks have already corrected over 10% and almost half of the Nasdaq is sown 20%, thus in a bear market, already. Where is this headed? Consolidation is the bare minimum. But, depending on the real economy, it could be worse. Take a look!

Gold Market News - Peter Schiff, Rick Rule, Marshall Auerback, Cullen Roche

***SILVER ALERT*** 20.09.14

Current prices reveal silver’s relative under-performance in the surging gold/silver ratio, which reached a four-year high of 68.17 today.


If you aren't sure about the gold/silver ratio, here's a video I did about it's relevance.






So it's a great opportunity to jump in, if you haven't already. Also keep an eye on the volume.


With a spot price of 17.8, the cost of production makes it very unlikely the price will continue to drop, however not impossible.