Tuesday, November 21, 2006

 

Platinum Run-Up A "Bear Squeeze?"

Bloomberg reports on precious metals. "Gold prices in New York rose the most in more than a week as a rally in the cost of crude oil boosted the appeal of the precious metal as a hedge against inflation. 'Crude is up today, and that'll help support gold and let this market do what it needs to do,' Nick Ruggiero, a trader at Eagle Futures Inc. in New York. 'There's good buying, and the market is still bullish.'"

"Gold futures for December delivery rose $6.60, or 1.1 percent, to $628.70 an ounce on the Comex division of the New York Mercantile Exchange, the biggest gain since Nov. 9. Prices were little changed yesterday."

"Crude oil rose above $60 a barrel after the Trans-Alaska Pipeline System limited the amount of oil it will carry as high winds disrupted loadings at the Alaskan port of Valdez, and a North Sea platform was shut because of a gas leak. Gold also gained after platinum touched a record high in London, boosting the metal's appeal as a cheaper alternative for jewelers."

"Platinum rose to $1,402.50 an ounce today in London on speculation a new investment fund for the metal will put a squeeze on supply. 'With Chinese jewelers unable or unwilling to buy platinum ahead of the Chinese New Year, it will prompt a switch to other precious metals,' Robin Bhar, an analyst at UBS AG in London, said."

From MarketWatch. "Platinum futures closed with a more than $15-an-ounce loss Tuesday, staging a complete reversal from their highest level in two months as doubts over recent speculation about the launch of a platinum-based exchange traded fund emerged."

"For traders to just run up prices for platinum 'wildly on something that hasn't even been filed for is a bit premature,' said Jon Nadler, an investment-products analyst at bullion dealers Kitco.com.'

"Feeding doubts over the potential launch of the investment vehicle, J.P. Morgan analyst Steve Shepherd pointed out in a note to clients Tuesday that Barclays Global Investors, the company that launched the first silver ETF, has said a platinum ETF is under consideration but has stressed that at present, there have been no filings with the Securities and Exchange Commission and none is planned."

"Spot prices for platinum had vaulted to an all-time high Tuesday, topping $1,400 on speculation of an ETF launch, according to Nadler. The gains in platinum helped lift gold and silver futures to three-session highs. Prices for the two precious metals still closed near the session's highest levels."

"Platinum for January delivery finished down $15.20, or 1.2%, at $1,219.10 an ounce on the New York Mercantile Exchange, retreating from a peak of $1,285, the contract's loftiest level since early September."

"On Monday, the contract gained $42 an ounce. The $140 to $160 rise and fall in spot platinum prices within the same day offers a 'clue about the cumulative power of fund money being first thrown at, then removed, from the tiny little market that platinum is, in terms of total value,' said Nadler."

"'To us, it looks like a classic bear squeeze. The squeeze is fueled, we think, by a combination of a tight physical market, the one-month lease rate for platinum is 30%, speculation regarding the launch of a platinum ETF, derivatives activity, and underlying all of this, a strong fundamental outlook,' Shepherd said."

"Shepherd believes the platinum market's too illiquid to support an ETF. 'The major platinum producers sell very little metal into the spot market, and above-ground stocks are tiny, so where would the physical metal come from to support an ETF?' he asked."

"Meanwhile, December silver tacked on 34.5 cents, or 2.7%, to close at $13.085 an ounce."

"'Gold has built and tested strong support between $610-$620 and appears ready to challenge key resistance around $640 next week,' said Peter Grandich, editor of the Grandich Letter."

"The yen was little changed, trading near a record low against the euro, as minutes of the Bank of Japan's policy meeting in October stoked speculation it will delay raising interest rates until next year."

"The economy is 'likely to expand moderately' and rates will be 'gradually' pushed higher, according to the minutes, released today. The yen has fallen against 14 of the 16 most- active currencies tracked by Bloomberg since the central bank lifted borrowing costs for the first time in almost six years on July 14, as investors cut bets on a second increase this year."

"'They have no intention to raise interest rates before the end of the year,' said Michael Woolfolk, senior currency strategist at the Bank of New York. 'Consequently, the yen remains under pressure.'"

Comments:
Plat is a small market, and easy to game. I don't believe there is enough physical to have an ETF, and given the high price and whipsaw moves, it would probably not appeal to small investors. I just can't see it.
 
The KITCO platinum pool only shows an $11 spread, so given the high volatility present in such a tight market it would be tempting to "trade" platinum. Don't have any physical myself, although wouldn't mind having some just because I love the look of those platinum eagles.
 
gofast- sounds like a good case for investing in platinum. people act like it's tough to invest in precious metals and platinum. but if you can't invest in coins(like platinum and gold and silver) you probably aren't an investor. probably a speculator. it's not that tough, especially in these internet days, to invest in coins.
 
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