Date: 5/21/12
Price: Free
SmallCap Network provides comprehensive research and opinions on AVL, PAL, PLG, PTM, PPLT and PALL.
If Mugagbe Nationalizes Platinum and Palladium Mines, Prices will Rise (PTM, PAL, PLG, AVL, PPLT, PALL)
Platinum and Palladium Stocks Should Shine
Reports that Zimbabwe President Robert Mugagbe will nationalize platinum and palladium mines in his country should have attention focused on Platinum Group Metals (AMEX: PLG), UBS Long Platinum (NYSE: PTM), North American Palladium Ltd (NYSE: PAL), Avalon Rare Metals (AMEX: AVL), PPLT (NASDAQ: PPLT) and PALL (NASDAQ: PALL)for both speculative (buying based on the attractiveness of the market) and investing (buying based on the attractiveness of the company) factors.
Mugagbe has a history of seizing property and creating scapegoats to divert the attention away from the way his rule is detroying Zimbabwe. Previously, Mugagbe took farms from white minority owners. This did much to destroy his country's agricultural base. It his worthy of note that other African countries recruited the farmers whose land Mugagebe appropriated due to their expertise. Mugagbe is now turning his attention to claiming foreign owned platinum and palladium mines in Zimbabwe.
Platinum and palladium both have significant industrial usages, which should appeal to the small cap investor. Catalytic converters in automobiles are the major market. More and more cars are being produced as India, China and Brazil develop. The great majority of gold, by comparison, is for investment purposes. For silver, less than half of the production is used commercially.
It also has a patter of following gold in price, as platinum is also used in jewelry. In 2010, the demand for platinum jewelry has increased by more than 80% in China and by more than 40% in North America. With more turning to precioius due to a loss of confidence in fiat money, platinum will rise in value as a "safe haven asset.'
Zimbabwe has the world's largest platinum and palladium reserves, after South Africa. Platinum is much rarer than gold. Platinum also has a historic price ratio of around 2.5-1 with gold. At present, platinum and gold are both around $1850 an ounce, with Palladium about $750 an ounce. Based on these macro-economic factors, platinum and palladium stocks and exchange traded funds should appeal to both small cap investors and speculators.
Mugagbe has a history of seizing property and creating scapegoats to divert the attention away from the way his rule is detroying Zimbabwe. Previously, Mugagbe took farms from white minority owners. This did much to destroy his country's agricultural base. It his worthy of note that other African countries recruited the farmers whose land Mugagebe appropriated due to their expertise. Mugagbe is now turning his attention to claiming foreign owned platinum and palladium mines in Zimbabwe.
Platinum and palladium both have significant industrial usages, which should appeal to the small cap investor. Catalytic converters in automobiles are the major market. More and more cars are being produced as India, China and Brazil develop. The great majority of gold, by comparison, is for investment purposes. For silver, less than half of the production is used commercially.
It also has a patter of following gold in price, as platinum is also used in jewelry. In 2010, the demand for platinum jewelry has increased by more than 80% in China and by more than 40% in North America. With more turning to precioius due to a loss of confidence in fiat money, platinum will rise in value as a "safe haven asset.'
Zimbabwe has the world's largest platinum and palladium reserves, after South Africa. Platinum is much rarer than gold. Platinum also has a historic price ratio of around 2.5-1 with gold. At present, platinum and gold are both around $1850 an ounce, with Palladium about $750 an ounce. Based on these macro-economic factors, platinum and palladium stocks and exchange traded funds should appeal to both small cap investors and speculators.
Jonathan Yates is a paid contributor of the SmallCap Network. Jonathan Yates's personal holdings should be disclosed above. You can also view SmallCap Network's complete disclaimer and disclosure.
