Platinum and palladium see rising investment demand while production plummets

Today’s AM fix was USD 1,323.25, EUR 999.06 and GBP 855.53 per ounce.   Yesterday’s AM fix was USD 1,334.00, EUR 1,002.41 and GBP 862.31 per ounce.

Gold fell $14.30 or 1% yesterday, closing at $1,321.70/oz. Silver rose $0.11 or 0.52%, closing at $21.45. Platinum edged up 0.2% to $1,495.24/oz, while palladium gained $0.25 to $736.25/oz.

Gold has crept higher in all currencies today and is particularly strong in Swiss francs, which have come under pressure after a report showed the Eurozone pulled out of recession last quarter. While German and French gross domestic product exceeded analysts’ forecasts, it is premature to become over excited about a recovery in the Eurozone which remains in a very precarious state.

Gold’s fall yesterday was attributed to unfounded fears that the U.S. Fed may begin tapering next month.  Atlanta Fed President Dennis Lockhart said that bond purchases may be reduced next month even though  inflation is below their target.  Profit taking was a more likely reason for yesterday’s small fall.

South African Platinum and Palladium Production - (Bloomberg Industries)

The Federal Reserve has been suggesting for months, indeed years, that they would return to more normal monetary policies by reducing bond buying programmes and gradually increasing interest rates. ‘Talk is cheap’ and it is always best to watch what central banks do rather than what they say. 

Near zero interest rates and bond buying are set to continue for the foreseeable future. Precious metals will only be threatened if there is a sustained period of rising interest rates which lead to positive real interest rates. This is not going to happen anytime soon as it would lead to an economic recession and possibly a severe depression.

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