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Theremay be some 60 listed stocks (see below) that offer direct or indirect exposureto platinum group metals (PGMs), from early stage explorers to fully fledgedproducers, but recent portfolio flow trends indicate that it's the more maturenames that have investors flocking in once again.  

Interms of price performance, relative to other mining sub-sectors, listedplatinum stocks currently rank fifth, after potash, iron ore, coal and majorminers. To that extent at least, platinum stocks are outperforming gold andsilver stocks. This is line with at least some prevailing sentiment in theprofessional research community.

Ina recent commodity and energy strategy note, the Bank Credit Analystrecommended that investors should buy a basket of platinum producer equities;that they should wait to buy platinum outright, and to stay long (bullish)platinum versus palladium (platinum's main sister metal, ahead of rhodium).  

Bothplatinum and rhodium have traded up to record levels in the past few months;the advance of palladium was less impressive. Around 80% of the world's PGMsare mined out of southern Africa, but Russia's giant Norilsk (NILSY US, USD 29.90 ashare) polymetallic complex ranks as the single biggest palladium producerglobally.

AsBCA Research reminds, the fundamental demand/supply imbalance for platinum isnot controversial. The latest big chunk of evidence on supply bottlenecks camewith Anglo Platinum (AMS SJ, ZAR 1,370.00) recently announcing that powershortages knocked down its platinum output by 19% in the first quarter of 2008.BCA Research adds that there is "not much chance of diesel autocatalystsubstitution over the next year".

WhileUS monetary conditions are seen as remaining generous for the rest of the year,a very good slice of this is seen as "in the price" of currency, money andprecious metal markets. Gold and silver futures are seen as high-beta plays;for platinum, price appears to be the main issue.  

Theprice of platinum impresses alongside its moving averages, despite theunprecedented pace in the recent uptrend. Net speculative positions in platinumremain high, but on the potential downside, jewellery-related demand forplatinum could be undermined.

Meanwhile,in notes from the RBC Capital Markets inaugural PGM conference held in Londonon Friday, analyst Leon Esterhuizen said: "We are dealing with an industry indistress. While the world needs more platinum the producers are being preventedfrom delivering by challenges such as restricted electrical power supply,limited and shrinking skills pool and sharply increasing capital and operatingcosts.   

"Howeverjunior companies who are able to succeed in this climate and capitalise on thevery high metal prices will potentially become prime take-over targets forlarger companies, enabling them to break into the select group of only ahandful of major global PGM producers.  The race is on!"

However,a glance at the pricing of junior PGM stocks indicates but slim investorinterest. A sampling of more than 40 stocks in this broad category shows thatprices are currently trading more than 40% off highs. Even in the Tier IIlisted PGM category, it is only really Aquarius (AQP LN, GBP 8.41) and Northam(NHM SJ, ZAR 72.00) that appear to be exciting investors.