Palladium Panic: Don’t Say I Didn’t Warn You…
Make no mistake…
I notified you time and again of the bullish opportunity in palladium.
In fact, on March 5th I revealed a bullish technical situation that led me to believe the metal was ready to surge. A few weeks later I pointed out a fundamental development making palladium’s bullish case even stronger. Finally, on May 19th I told you there was still time to get on the bullish bandwagon.
Let me ask you…
Did you take advantage of the opportunity?
If so, you’re sitting on substantial profits right now. After all, palladium is surging to multi-year highs at $850 an ounce this week.
Take a look…
Why is this metal going bonkers?
As I explained a few weeks ago, South African labor talks have been underway since the start of the year. Striking mine workers want higher pay while struggling mining companies attempt to keep costs low.
Apparently, it’s a battle neither side is willing to budge on…
Palladium is surging on news of a breakdown in negotiations. Making matters worse, South African Mining Minister Ngoako Ramatlhodi is reportedly walking away from the talks.
Remember, analysts at Commerzbank believe 10,000 ounces of platinum and 5,000 ounces of palladium production are lost each day the strike wears on.
And don’t forget, palladium is used heavily in the automotive industry as an exhaust catalyst. Approximately 50% of the global production goes into this use alone. With supplies growing thinner by the day, investors fear a palladium supply shortage is knocking on the door.
According to recent analysis by CPM Group, a commodity consulting firm, global palladium inventories are capable of meeting a mere 16 weeks of demand!
Given this information, how high can the metal go?
As you may remember, I proposed in my March 5th report that palladium would hit $850 in mid- to late-2014. On the other hand, the consensus analyst estimate saw the metal achieving that goal in 2015 at the earliest.
Clearly, the metal is on track with my projections…
But now that we have fears of an imminent supply disruption for global automakers, $850 may prove to be the first step in a long road to higher prices. In fact, Frank Holmes, CEO of US Global Investors, sees palladium jumping to $1,000 because of the uproar.
The last time palladium traded that high was in 2001!
What do you do if you’re long this metal?
If you jumped in the ETFS Physical Palladium Shares (PALL) like I suggested in early March, stick to your guns- palladium has every reason to go higher.
But watch the news closely…
If South African workers and mining companies strike a deal, the price of palladium will fall very quickly.
Until Next Time,
Justin Bennett
Category: Palladium
