On the surface, it appears that favorable fundamentals, in addition to higher levels of money printing, should be bullish for platinum.
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New York, NY (PRWEB) November 23, 2012
In a recent Investment Contrarians article, editor and financial expert Sasha Cekerevac reports that a report by Johnson Matthey, authored by Jonathan Butler, states that it’s highly likely that the platinum market will be in a deficit, due to a significant reduction in the supply of platinum, and the recycling of catalytic converters. (Source: “Platinum Market Forecast to be in Deficit in 2012,” Platinum Today, November 13, 2012, Johnson Matthey, last accessed November16, 2012.) According to Cekerevac, such a scenario would certainly be bullish for platinum mining stocks, which aren’t affected by any operational issues.
“On the surface, it appears that favorable fundamentals, in addition to higher levels of money printing, should be bullish for platinum,” states Cekerevac. “Of course, there are no certainties in life. With the price of platinum holding above its 200-day moving average (MA), it’s certainly above the lows of the year, which should be bullish for platinum mining stocks.”
Cekerevac notes that the report cites severe disruptions in South African mining as one cause, among others, of the shortfall in platinum; these disruptions will result in a 10% decline in worldwide platinum supplies while demand remains firm. Cekerevac reports that South Africa, specifically, will have a 12% decrease in platinum extracted, the lowest in 11 years. (Source: “Platinum Market Forecast to be in Deficit in 2012,” Platinum Today, November 13, 2012, Johnson Matthey.)
“This is one major issue that people must be aware of when investing in mining stocks,” warns Cekerevac. “Regional disruptions due to strikes, political instability, and other operational problems are inherent in all mining stocks, not just those involved in the platinum industry.”
According to Cekerevac, the worst-case scenario would be to have a portfolio with a high percentage of assets invested in one sector, such as platinum mining stocks, located in one country that is undergoing radical political reforms, as can be seen in the recent labor strikes and turmoil in South Africa; these events are not only affecting platinum mining in the region, but they are also causing massive platinum supply disruptions worldwide, meaning the entire sector is affected, he explains.
“Supply disruptions in the platinum market will be a benefit to those firms that are not directly involved in the disputed areas, such as South Africa,” concludes Cekerevac. The Investment Contrarians expert advises investors to look for platinum mining stocks that have a strong management team who can prevent operational disruptions.
To see the full article, and to get a real contrarian perspective on investing and the economy, visit Investment Contrarians at http://www.investmentcontrarians.com.
Investment Contrarians is a daily financial e-letter dedicated to helping investors make money by going against the “herd mentality.”
The editors of Investment Contrarians believe the stock market and the economy have been propped up since 2009 by artificially low interest rates, never-ending government borrowing, and an unprecedented expansion of our money supply. The “official” unemployment numbers do not reflect people who have given up looking for work, and are thus skewed. They believe the “official” inflation numbers are also not reflective of today’s reality of rising prices.
After a 25- to 30-year down cycle in interest rates, the Investment Contrarians editors expect rapid inflation caused by huge government debt and money printing will eventually start us on a new cycle of rising interest rates.
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Find out where Investment Contrarians editors see the risks and opportunities for investors in 2012 at http://www.investmentcontrarians.com.
George Leong, B. Comm., one of the lead editorial contributors at Investment Contrarians, has just released, “A Problem 23 Times Bigger Than Greece,” a breakthrough video where George details the risk of an economy set to implode that is 23 times bigger than Greece’s economy! To see the video, visit http://www.investmentcontrarians.com/press.