The Gambler's Fallacy

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Stay tuned for more of the same (oil, dollar, stocks, news) and watch for resistance holding or not.

And now, our 2008 platinum price projections for the second half:

*** We caution up-front that as we are not a commodity trading firm, we do not issue such opinion with any underlying buy or sell signal intent, and that a projection is not a soothsaying undertaking designed to prove anyone right or wrong or to motivate investors to act one way or another. So, if the numbers trouble you or not, save the analysis (and related e-mails) of their validity until the last trading day of the year is over, and all the results are in. In the interim, our expectations -as do yours- remain in the realm of opinions (to which, everyone is entitled).***

Bolstered by an approximately 550,000 ounce supply shortfall, the platinum market should continue to orbit around its first half average price of $1950 and might gain in that metric to a possible second half average of $2050. While the first half's trading range was quite wide (from a low of $1531 to a high of $2273) we see a narrowing of the price channel to an estimated $1850 to $2350 as we wind down 2008. Platinum ETF and automotive offtake must remain strong as we go forward in order to achieve such results. The latter has started to look wobbly in the wake of record oil prices. However, since we expect a correction in energy markets and continuing electricity problems in South Africa, the demand/supply equation should continue to play favorably on behalf of the noble metal.

In contrast to platinum, palladium finds itself in a surplus situation of approximately 1.4 million ounces, which, albeit smaller than seen at the beginning of 2008 will keep a lid on major price advances in the near-term. The two 'wild cards' in palladium's future price equation are its substitution attributes and (as usual) Russian sales (or lack thereof). If gold and (especially) platinum prices were to surge far higher, the metal becomes a very attractive substitute for both jewelry as well as automotive users. Russia, on the other hand, has been mum about inventories (nothing new there) but appears to be selling less than it could/should. We expect palladium to average $450 in the second half of 2008 but also envision a narrowing of its price range from the first half's roughly $220 spread (from $364 to $582) down to about $100 - in a channel of from $390 to $490 per ounce.

Happy Trading.