If you're thinking of stashing yourmoney in gold, think again.
The yellow metal has enjoyed a nice run, posting gains for 12 years
running. And it may extend that streak in 2013, particularly
ifinflation heats up.
But there's another precious metal that is primed to deliver
even stronger returns in the near-term. And no, I'm not talking
about silver (although it too has some momentum).
I believe the big winnerwill be platinum, which is about 30
times rarer than gold (and far more useful). Platinum and its
sibling palladium are most commonly used in catalytic converters.
They are the secret material that helps turn noxious pollutants
into harmless water vapor.
According to Bloomberg, global auto production will expand for
the fourth straight year in 2013 to 82 million units. That's alot
of cars and trucks hitting the roadways - almost all of them
outfitted with platinum group metals (PGMs).
Toyota, General Motors and other car makers will swallow nearly
4 million ounces of platinum this year, the biggest auto
consumption in six years. By itself, thisuptick in demand could
drive prices higher. But there's a whole other side to this story -
while platinum usage is rising, supplies are dwindling.
Most of the low-hanging, high-grade fruit has been picked.
Output is expected to dip in both Russia and South Africa (which
combined account for almost 90% of the world's supply). To find new
platinum, miners are now digging 1.4 miles down, where temperatures
can hit 160 degrees.
Now, themarket is reacting to news that
Anglo American Platinum (
, a major platinum supplier, has suspended activity at several
South African mines.
According to Bloomberg, the shutdown is expected to shave output
by 400,000 ounces this year -- equivalent to nearly 7% of the
world's total production.
Keep in mind, the platinum market was already in adeficit , so
idling these mines will widen the supply-demand shortfall.
This time last year, I predicted a sharp rebound for platinum in
2012. And the metal delivered, posting a solid 9.8% gain for
But here's the bigger news: platinum has already jumped
8% in 2013, nearly matching last year's return in about four
But I think the rally is just getting underway.
Platinum had already been trending higher to start the new year,
but buyers have been even more enthusiastic since Anglo American
When a small miner scales back output, it barely leaves a
ripple. But when the world's largest platinum producer
throttles back, investors take notice. And this isn't an isolated
event, either -- Anglo American has endured numerous challenges
coaxing platinum out of its aging properties.
Aside from the oppressive heat, South African miners have also
been plagued by labor unrest and frequent power outages.
Electricity shortages and worker strikes are more than just
an irritation. They are ongoing disruptions that are crimping
But this latest disruption is deliberate -- Anglo American is
downsizing its workforce and restructuring with an eye on
profitability as industry costs escalate. In many places, it now
costs more than $1,500 to pull an ounce of platinum from the
ground. That has thinned (and in some cases erased)cash profit
So I fully expect to see other platinum miners scale back and
abandon their less profitable mines. That will further trim the
output from what is already an undersupplied market.
If you're looking for abeneficiary , consider the
First Trust Global Platinum (
. TheETF , which tracks the performance of a basket of leading
platinum and palladium producers, has bounced 19% since the
beginning of December. But thefund is still well below the $20
level from a year ago, despite the underlying metals advancing to
And as I said earlier, this rally is far from over given the
looming supply shortage.
Action to Take -->
Keep in mind, platinum (like any othercommodity ) can be volatile.
With that said, I still see a classic supply-driven rally
unfolding in platinum this year, making PLTM one of my top precious
-- Nathan Slaughter
P.S. -- We're in a new era of scarcity. Around the world,
literally billions of people are all fighting for the same limited
resources... which has created a big opportunity to profit. Gains
of up to 8,000% have been made in the past decade from Scarcity
& Real Wealth, but I think that's just the beginning. I just
finished several research reports detailing how you get bigger
gains right now. To access them, click here.
Nathan Slaughter does not personally hold positions in any
securities mentioned in this article. StreetAuthority LLC owns
shares of PLTM in one or more of its "real money" portfolios.
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