Platinum took the brunt of the selling that was sparked by Nissan's
announcement of the development of a new catalyst that is expected to use about
half the amount of platinum, palladium or, in some cases, rhodium.
Typical of a thinly traded market, vigorous selling took place as traders
focused solely on the demand side of the story while basically ignoring the
possible disruptions in supply. News of wage-talk cancellations and other
ongoing labor-related issues at the Angloplat operation in South Africa for
example, were seemingly swept aside in the nearly one-sided trading activity.
As a result, prices skidded about $40 an ounce, taking out the 50-day moving
average in the process.
More volatility is expected over the near-term and it is possible that platinum
could go screaming to the upside just about as easily as slipping another $20+
an ounce. But, in my opinion, the internal momentum oscillators are suggesting
that this particular sell-off probably has at least one more wave to go and a
test of the support at $1260 is expected. As is the case with palladium, I
would recommend buying platinum if it tests key support.
My intermediate/long-term projections for the precious metals as an asset class
remain quite bullish, advances in catalytic converter design notwithstanding.
If the gold market advances as I expect it will, my guess is that all the
platinum traders who ran to the "sell" side this week will likely be scurrying
to the other side of the boat when the wind shifts again...
