“What goes up, must come down”

Sir Isaac Newton once famously proclaimed, “What goes up, must come down” and while he was speaking of physical objects it looks as though his analysis can pertain to financial markets as well.  The jolt from last week’s QE3 announcement from the Federal Reserve pushed many financial assets to multi-month highs but the rally wore off with a vengeance to start this trading week. The precious metals complex was hit particularly hard as profit taking in the metals was exacerbated by a sharp decline in oil and modestly easing tensions in the South African mining community. The metals were pushed anywhere from 1% to more than 2% lower by the end of the trading session on Monday. Longs in the PGM complex took the opportunity to lock in profits following reports that wage negotiations would resume at Lonmin and Anglo American Platinum’s Rustenburg mining operation would restart today. Perhaps a more intriguing story is playing out in rhodium where the metal has jumped from $1100 to either side of $1400 in just the last day or so. Some would argue that rhodium, a byproduct of platinum mining, is simply catching up as Platinum moved roughly $300 north in a matter of weeks. While the unrest in South Africa appears to be softening the issues remain far from resolved giving the PGM complex some cusion to the downside.  Have a great day!