As many of you know, I have been predicting this since late last year.
Here is my simple case without going into the over one dozen specifics I posted weeks ago:
# 1.) Palladium is mainly a by-product of nickel production in Russia and platinum production in South Africa.
In both cases, for many reasons, costs are sky-rocketing and production is decling. For the near future, there is nothing to indicate this will get better, indeed there are many factors indicating things will get a lot worse. For all we know, the world may have already seen "peak palladium production".
# 2.) Contrary to what a lot of analysts have published, demand is increasing greatly with surging auto sales and production in the US and China more than off setting declines in Europe. And Europe uses more platinum because of wideespread diesal usage. If Europe rebounds even a bit, this will only add to demand and supply constraints. This uptick is believed to be very solid at least through 2014 and probably though 2016.
# 3.) New auto sales will continue to surge as long as gas is high and interest rates low as the average age of an American car is 10 years and the new models are about 30 to 40% more fuel efficient.
# 4.) New tighter pollution control standards go into effect - specially in China and emerging markets.
# 5.) Validmer Putin has put one of his boys on board of Norlisk Nickel. He personally now, as Russian supreme leader, controls all precious metals there and has been on a major stockpiling/ hoarding binge as he has ordered major industrial ramp ups in the militray and consumer areas. Therefore they will be selling very little form "official" stockpiles and certainly not from the old KGB "secret" hoards. Also, the Swiss are desperate to keep their franc from surging and resorted to new capaital controls. Russia normally sells pt/pd through them and thus this avenue won't have the volume it had by any means.
# 6.) Investors are feeling from gold ETFs into pt/pd ETFS.
Sentiment: Strong Buy
Palladium $1500 in a few years IMO.
It could become the most expensive metal in the world due to its rareness and industry usage.
Plus, this company is a good buyout target.
Under $2 is a steal.
You didn't even mention the further SA labor disruptions that will likely disrupt supply, perhaps within the next several months.
Regarding #1, there are some newly discovered PGM resources from SA on the horizon that are not as deep as the current reef sites, but they are still a few years off. In the mean time, things could get pretty interesting for Pd.
#4 could be a very big deal with new emissions standards going into effect in January 2014 for much of the West, plus China beginning to see the light, as no longer see the sun.
That is a given and included in my #1 above. Actually, they are coming up on their 60 day period by law before they can start shutting shafts down. Even though they have acknowledged the rival union, I don't see this helping much. Unemployment is already 25% and crime through the roof. When they start actual closings and thousands being laid off - that is when the #$%$ will hit the fans.
Over the weekend, things were already rough with some necklacing going on in Rustenburg, the main platinum/pd producing area of SA. As you may know, this is like a national past time there. The mob gets together, puts some tires on the folks they don't like, douse them with gas, light them up, and watch them "dance". The police were powerless to stop it. Just wait till the actual closings. Rustenburg will have "balls" of dancers like these!
So again we ask ourselves the question, if you are mining investors, where would you rather invest? South Africa or Canada where the "restless natives" means those pesky moose wandering around the mine shafts and areas looking for some free food?
Sentiment: Strong Buy
As reports of massive new gold vault constructions come in, and private hoards now in China vastly outnumber "official" ones, the light bulb is going on is that there is massive worldwide production of gold with a massive overhang of supply developing. Remember, gold does not have many industrial uses compared as to the supply out there.
# 7.) As we know, pd is a critivcal industrial metal with very limited supply sources: 40 % or so from Russia and nickel production, 40% or so from South Africa from platinum production. So by its very nature is far more limited than gold and silve in supply and greatly more in demand.
#8.) The BIG ONE! This much promoted notion of "The Great Rotation" out of bonds and into stocks and commodities. Right now, the experts are stumped that it is not occuring as interest rates are almost 0 and bonds severely over priced. But it is bound to happen sooner or later. Right now, onlhy 35 % of investment savings are in stock. If even a few percentage points flow out of bonds and into pt/pd the prices WILL SURGE!
BOTTOM LINE: For all these reasons and more, pd will hit $1,000 soon!
Sentiment: Strong Buy