Market Update GoldCore

Market Update GoldCore

China Platinum Imports Rise – Bullish Platinum and Palladium Fundamentals

Today’s AM fix was USD 1,385.25, EUR 1,071.43 and GBP 917.75 per ounce

Yesterday’s AM fix was USD 1,378.75, EUR 1,070.21 and GBP 908.39 per ounce.

Gold fell $6.50 or 0.47% yesterday to $1,377.80/oz and silver finished down 0.56%.

The fundamentals of the platinum and palladium markets are beginning to receive market attention and not before time. The positive supply demand dynamics are leading to increased investment demand as seen in the ETF data and Chinese demand rising again due to both industrial and jewellery demand.

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Net platinum imports into China jumped to 8.9 metric tonnes last month, marking the strongest inflow in about a year according to UBS.

This reflected a 14% increase from March, and year-on-year growth of 29%. The trade data coincides with strong platinum volumes on the Shanghai Gold Exchange (SGE), which coincidentally also totalled 8.9 tonnes for the whole month of April, the strongest turnover since September 2011. The fall in prices towards $1,400/oz prompted a pick-up in physical buying

While gold is still the more popular precious metal in China, platinum jewellery has also enjoyed an improvement in demand. Johnson Matthey estimates a 14% increase in net global platinum jewellery offtake last year, with China accounting for a large portion of the increase. The expansion in the number of retail outlets across second and third tier cities in China has contributed to the growth in platinum jewellery demand.

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Investment demand is likely to have received a boost from the announcement in March that Russia and South Africa, which together control about 80% of the world’s reserves of platinum group metals, plan to create a trading bloc similar to OPEC to control the flow of exports of the precious metals.

Platinum Group Metals (PGM) are seeing broad base global demand. Besides investment demand, they are widely used to make catalytic converters that filter car exhausts, in jewellery where increasing demand has been seen in Asia, and in many military applications.

The majority of the world's platinum reserves are found in just one country, South Africa which is home to 75% of global platinum production and 95% of known reserves. Neighboring Zimbabwe also sits on large reserves.

We believe that due to the very favourable supply demand dynamics in the platinum market, it should rise well above the inflation adjusted record high from 1980 at $2,700/oz in the coming years from $1,468/oz today.

News From Around The World

Texas Pension Fund: "Gold is a hedge, and it still fills that role"   Wall Street Journal Video: Platinum and Palladium Shine as Gold Tumbles   Bloomberg Platinum and Palladium: A Fundamental Shift   Casey Research

Insight: Cyprus, Energy & Gold: Wealth Protection In A Lawless World

April's edition of Insight takes a close look at the recent banking crisis in Cyprus and how it is causing other states to consider the imposition of taxes on depositors' savings. The reasoning behind these 'taxes' is to part cover the colossal levels of  indebtedness that most nations find themselves in.

Chris Sanders, our Insight April contributor, maintains that it is only capital accumulation enabled by real economic growth that can alleviate the massive levels of indebtedness. Unfortunately, Sanders finds that this is nigh on impossible given the excessive energy costs required, or as he puts it, 'the marginal energy to power such growth is not there to do so.'

On April 15th, a small number of traders executed a suspicious sale of futures on the COMEX in New York which resulted in an 18% fall in the price of gold. Sanders points out that on the one hand we have this level of indebtedness that isn't going to go away, and on the other, we have a financial system that appears to operate outside the general rule of law. When you take everything into account, Sanders surmises that it's all a great advertisement for holding gold or silver in secure storage on an allocated basis.

ENDS

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