HOW DID THEY BUILD THOSE STOCKPILES?
The platinum price continues to completely defy logic and confuses me. Maybe my thinking is just totally wrong. I hold the platinum exchangetraded fund (ETF) and expected it to rise during the strike. It didn’t. Sure, the mining companies had stockpiles they were selling down, but it still confused me that they were able to meet demand. Then the strike ends and suddenly the price starts to move higher, heading above $1 500 for the first time in ages. None of it makes sense unless the information we have is wrong. Conventional wisdom says that we have a slight oversupply in the global platinum market that will soon move into undersupply; this should boost the price. But maybe that view is simply wrong, maybe we have more supply than we thought. That extra supply could be coming from scrap recycling and stockpiles. But there’s another issue here, how did the platinum miners build those stockpiles? Simple, they sold some platinum to themselves. In other words, they inf lated demand by being a buyer. So we could have two problems: less demand (miners buying) and more supply (stockpiles and scrap recycling).
*The writer owns shares in Aspen.