Rocky Road ahead for Platinum – Prices set to fall

Video transcript:

Today is Sunday 27th September 2015 and we are producing this video to warn about a rocky road ahead for Platinum over the next few months.

A few days ago, we produced a video on the Volkswagen Car Group and how they manipulated exhaust emissions. We did this as a precursor to what we believed to be the likely consequence – a worldwide investigation into diesel motor cars, and a detrimental effect on the price of Platinum.

The auto Industry accounts for almost 30% of global Platinum usage according to Mitsui & Co precious metal analysts – the metal is a key raw material in auto catalytic converters used in diesel engines, and in Europe diesel cars represent 45% of sales.

Phil Flynn of CME Group pointed out that diesel engines use Platinum and petrol based vehicles use Palladium in their catalytic converters therefore suggesting that demand for Platinum will fall and demand for Palladium will rise as people move from one diesel vehicle to a petrol vehicles.

Some metal analysts and investors predict that the price of Platinum could fall below $900 as a result of the Volkswagen emissions scandal. ABN Amro believe that the price could fall as low as $800.

Spot Platinum fell heavily last Tuesday and hit a near 7 year low on Wednesday at $929 before recovering slightly to $932 and ending the week on $947. Interestingly, Palladium ended the week up at $662

Michael Sheehan, Senior Portfolio Manager at US based Orion Commodities Management stated “at some point Platinum and Palladium prices will go to parity …. My guess would be between $700 and $850.”
We have been asked a number of times of our views on Platinum by subscribers and on each occasion we have expressed our short term concerns over its price because of the global slowdown in car sales. Naturally this emissions situation is likely to cause further downward pressure. Only yesterday Switzerland issued a ban on certain types of diesel motor car sales, and we foresee this continuing throughout Europe while other manufacturer’s vehicles are also tested.

Added to that, the World Platinum Investment Council’s most recent report showed that Platinum jewellery demand for the second quarter of 2015 declined 11% quarter on quarter, while refined production from South Africa increased by a similar percentage.

So we are bearish short term on Platinum and a little bullish on Palladium while this situation becomes clearer and the rest of the world has responded to the Volkswagen debacle.
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Silver Illuminati owners come from a background of Banking, International Wealth Management and Economics. Having now retired from these worlds we are not qualified to give investment advice. Therefore, this and other productions must not be deemed to be giving such advice and merely represent the personal views of its owners.