Finweek English Edition - - INVESTMENT -

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.

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