PLATINUM — Hi : $2120 Lo : $1400 Average : $1822
Since 1970 platinum typically commands a 30% premium over gold - currently platinum is trading at a significant discount reflecting weak global industrial output and modest investor interest - meanwhile the supply pipe line remains thin and with speculator interest on the lows, a short covering rally is a distinct possibility. In short, we believe platinum prices are depressed and reflect an expectation of ongoing and deepening economic stagnation - this explains why it is not trading at well over the $2000 level. That said, we see the possibility of significant platinum price gains on South African production shortfalls, on improving investor sentiment and on re-building of physical platinum stocks amongst industrial clients - in advance of a recovery on the economy in late 2012. Unfashionable though it is to say so, we see scope for brighter economic prospects during late H2 2012 and we see platinum and palladium as some of the strongest performing commodities for the year.
PALLADIUM — Hi : $1050 Lo : $650 Average : $846
We think 2012 will be the year that palladium shines once again. Yes, global industrial output is likely to remain weak and yes the US Dollar Index has scope to firm from record lows in 2011 as the US is the first economy to start to emerge convincingly from the mire (with dollar strength conferring a dampener on commodity prices). Notwithstanding those caveats, we think that palladium will be supply constrained in 2012 as Russian stocks finally draw to a close which prompts industrial clients to build stocks. This we believe, will rekindle good investor and speculator interest. In short, despite poor demand fundamentals we believe palladium will rally in 2012 and be one of the top performing commodities of the year.
Norman is the owner and chief executive officer of the London-based gold broker Sharps Pixley Ltd.