Today’s precious metals complex continues to be under attack as the US
dollar continues to strengthen on Fed rate expectations. Where will the
bottom be? Well, in certain markets this downward price decline is
directly the cause of financial
crisis.
Lonmin one of the world’s largest platinum producers is barely
keeping above water. A departure of this miner would cause a squeeze on
supply and crisis in employment in South Africa. The belief is that
Lonmin will not be allowed to go under but the South African
government which are minority partners will feel the pain down the road.
Is it really possible to keep kicking that can down the road and there
be no repercussions? Not likely. Shorting platinum
may look good in the short term environment to fund managers at the
moment. In this small illiquid market it can turn on a dime. Often
people equate
platinum
and gold
together but in reality this market is tiny in comparison and hence the
price moves are often less justified by the market environment than by
big money playing the part of a gorilla in a glass house. It looks like
we are nearing the end of the recent barrage
of attacks and we can expect a bit of recovery before the close today.
