I hope you mean 400 point drop in the market, if PAL dropped 400 points, we would be getting calls from collectors.. I agree Tuesday is going to be a bloodbath. If PAL holds up in the morning, I might sell my position and wait it out. I have most of my money in BEARX so I am not too worried (though that is going to get crushed by gold prices falling and Tice's long positions). I am considering just taking the money from PAL and shorting an index like the discretionary spending ETF. When jobless rates go up and all these foreclosures are not halted by the government, that sector is going to drop the most. Everybody knows that financials will drop and they already have been hammered. The government will bail out the banks. But the government is not likely to lift a finger the average American. Especially since the only democratic candidate likely to be nominated at this point is Clinton. Maybe Obama would do something for people but I doubt it.
If mortgages are allowed to go into foreclosures and nothing is done to convert variable rate loans to fixed rate loans, then the economy will dive fast, very fast, and very far. Discretionary spending will be the worst sector since it is obvious not many people have anything to spend on luxury or normal goods. With the dollar falling, they can't cheaply purchase inferior goods as easily at places like Walmart either. Real income is dropping faster. Joblessness increasing. Debt at an all-time high (most of which is attributed to health and an average drop in real income). Credit is going to be rather difficult after a few months of this as well.
I am not sure where this will leave PAL. Equities look like crap now. PGM prices have been depending upon discretionary spending for jewelry and industrial demand (automotive and oil services). The only portion of demand that seems likely to grow is oil services. Fuel cells might take off. But weakness in the other areas of demand seem likely to affect PGM prices even with fuel cells rolling out en mass. The other problem I am seeing is how agribusiness and oil companies are pushing ethonol. I am sure many people here no that is a bogus technology. It costs almost as much oil to produce as you would consume in the first place. It also will drive up corn prices which is why agribusiness wants it so badly. Then we have the problem with auto manufacturers pushing hybrid vehicles when they give you almost no savings in mileage (most of the savings comes from the fact that the car is so small and light with few HP).
So, honestly, where does that leave PGM prices and thus PAL? Considering what I just wrote, you are only holding onto technicals of Pd (especially the Pd-Pt spread). But I just don't see it happening anymore. If this economy is going to be as bad as I feel like it will be, then most of the PGM demand will dry up globally. It would take a radical drop in supply to push PAL back up.
When the economy recovers, then PAL will be set to go. But this is starting to look pretty bad, in my opinion. I mean really bad. There is no way the banks, lenders, and wealthy families of America will suspend their greed to allow politicians to take the actions required to avert what is coming. This gilded age is over.
so funny how this works. Now all of a sudden things look really bad. I would not sell your position today. We will gap down on the open, some turmoil, maybe a little more down and then rally. Look at the charts don't be a fool. This is not the time to sell it is time to buy. Sell when the Dow Jones rallies from 11400 to 13000 in the next few days.
Don't be fooled by the progaganda. Platinum and palladium was sold off in the last two days together with gold and silver not because suddenly the industry has weak demand of these two metals in the past few days. But because PGMs are precious metals and they were knocked down in sympathy with gold and silver. Gold and silver was knocked down by TPTB to prepare for the inevitable fall of US dollars when the Fed is forced to immediately cut rate.
It's volatility in the market. Long term trend of gold and silver is still up. As precious metals will be perceived as safe haven of assets. There is just not enough gold in the world to absorb all the liquidity, so there will be plenty of spill over to silver, and there is just not enough gold and silver to absorb all the money, there will be plenty of spill over into platinum and palladium.
The safe haven investment spill over into palladium will work 4 times harder than those into platinum, because for the same amount money you can buy 4 times more ounces of palladium than platinum. This will jack up palladium.
As for platinum and palladium jewelries. Don't treat them as discretionally spending. You don't walk into a gas station, decide to buy a pack of cigarette, a bag of potato chips, and by the way also buy a palladium diamond ring for your wife as discretional spending. The luxury items are not discretional spending, they are a form of investment to preserve some fortune.
And such spending is actually going up. People are buying luxury jewelries as they face uncertainty times. Look at Tiffany and you know. Do you also happen to know that the art collective market is going crazy? For super rich people, instead of seeing their fortune diminish in their bank account, they might as well buy a $100M Picasso painting, or a $150M luxury house. You know the world record of the most expensive houses keep breaking new record?
I looked at today's chart of PAL, which is PDL.to traded in Canada. It's very impressive. They tried to push it down to $3.25, but not a single panic seller showed up for the next half hour. One buyer shows up half an hour later and the price returned to $3.49. Such lack of panic sellers is very impressive in a market down day like that!