Industry stocks becalm platinum price as strike grinds on
Platinum's price stability in the face of the longest miners' strike in South Africa since the end of apartheid is testament to the industry's success in using stocks built up in advance to hold the market steady.
That's good news for consumers, but bad news for investors looking for a payday.Kitco spot gold $1288.20 down $7.70, spot platinum $1415.00 down $9.00. We are reasonably sure gold will see $875 this year. For folks who had to have exposure to precious we recommended our dirty hedge (long PPLT ETF, short GLD ETF). Here's the last six months, via Yahoo Finance:
Miners in the world's biggest platinum producer have been on strike at Anglo Platinum, Lonmin and Impala Platinum since Jan. 23, shuttering 40 percent of global production.
Under normal circumstances, such an outage might have been expected to drive prices of the metal higher. However, platinum , which is used chiefly in jewellery and as a catalyst in vehicle exhausts, remains stubbornly lower, at $1,412 an ounce, than on the first day of the strike, when it fetched $1,452/oz.
Analysts put it partly down to the availability of above-ground stocks of the metal, which Citigroup estimated at 9 million ounces ahead of the strike, nearly a year's demand.
But who holds the stocks is as important as the size of them.
"There's a difference between the mining companies and car companies, whose stockpiles are precisely there to be used up at times of shortage, and investors, who have to be persuaded to part with their holdings via a higher price," Macquarie analyst Matthew Turner said.
"The fact that the price hasn't responded suggests to me that it is those mining company and car company stocks that are being used up at the moment. That's why the strike hasn't had an impact."
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