It's my understanding that a majority of SWC's short interest is not from short term speculation, but rather long term, perhaps related to hedging/protection of convertible debt. As this majority did not "cover" in the spike of 2014, it will probably not do so in the next surge, either.
The short positions in Pd futures, OTOH, may help magnify a rally in Pd prices, which would be nice for SWC longs.
"There are only 2 scenarios I can see that can really move the price needle."
I see a dozen or so potential major movers, with the likelihood of bullish influences somewhat outweighing the bearish scenarios.
I suppose this number may be reduced by more than half if one discounts fundamental scenarios, such a supply disruptions, global auto growth, etc.
As I see it, just because fundamentals have not been in vogue recently, it doesn't mean that trend will continue indefinitely. I suspect the shift back to fundamentals focus may happen sooner than later. And now that Pd non-commercial shorts are back to their level seen in January, any rally could be spring loaded.
A 20-30% move up in PGM prices could easily trigger a 60-100% move in SWC. Not sure if/when this will happen, though, I see a fairly good chance of it before the year is up.
I'm curious as to what impact you believe SWC's management could have on the price of Pd, short of halting production?
Sure, Frank invested SWC funds in marketing schemes to bolster the interest in palladium jewelry. But whether that had $1's worth of impact to the market price of Pd., or whether the promo expense was higher than any benefit is a matter of debate. IMO, any impact was temporary and negligible. I think you may be giving Frank too much credit in this regard.
If a miner could influence prices in a way that isn't a temporary spike, then one would think that Norilsk, whose Pd production is 10x SWC, would be all over that. Their investment consortium of $200M, which supposedly start to buy Pd earlier this year, hasn't been very price supportive, yet. Russia did impact Pd price in a major way by withholding delivery 17 years ago, but that sort of back-fired, causing the industry to substitute Pt for Pd.
A little more patience regarding metal's pricing may be helpful. I disagree with Bell's position that the deficit in not important. How many years of above ground stock there is become less and less important as sentiment shifts to the positive, and holders of that stock no longer wish to sell at low prices. Fundamentals will matter again, at some point. Also, non commercial short vs long interest is 2-3X for Pd, compared to Pt, Au, & Ag. So, when sentiment shifts, it should be propelled somewhat by short covering.
If Pd prices stay under pressure and SWC price retreats again, why not use that as an opportunity to accumulate more, at a better price?
Wanting SWC to have a significant influence on market prices is not going to lead to much, IMO, other than frustration.
"What is new is PGM compounds to create enzymes that catalyze reactions ."
Yes! That's exactly what I found to be both novel and fascinating.
"With a noble metal at its heart rather than the common transition metal, myoglobin expands its chemical powers. Specifically, it becomes capable of converting a carbon–hydrogen bond to a carbon–carbon single bond. In fact, the iridium-substituted myoglobin catalyzes a reaction for which there is no known natural or engineered enzyme."
I just read a fascinating article in Genengnews, titled, "Iridium Implant Makes for a Bionic Metalloenzyme".
It caused me to reflect on my own attraction to PGMs. A fair part of my PGM interest is rooted the speculation of future technological harnessing of PGM's unique properties.
Maybe, I should consider buying physical iridium … given that there is no iridium ETF, as of yet.
While the iridium speculation may be premature, I enjoyed the creative diversion that this article inspired. It makes me wonder what palladium enhanced enzymes might be capable of.
"This is the first proof of principle of a new strategy to catalysis," stated Dr. Hartwig. "We've synthetically changed a protein to give it the functionality of a chemical catalyst while keeping in enough of the biology to allow us to use methods of molecular biology to evolve new functions. The long-term potential of this approach seems limitless."
While I'm not currently overly long SWC. I have a modest core, though, still considering adding 50-60% when the time is right.
I see the head and shoulders pattern could go in either direction, depending on what time-frame you are looking at. Protection may well be the safe play (as it intrinsically is, though, for a fee). Brexit may add additional risk.
However, downside risks aren't necessarily more likely than upside opportunities. The Pd deficit for 2016 is projected to be greater than in 2015 ... and SA wage negotiations have just started. Anything can happen in either direction.
It's time to put on the jazz shoes and dance with the weekly music.
Hey B, long time, no post.
Sounds like you need Adblock. I installed Adblock Plus a couple of years ago in response to Yahoo's distracting and band-width eating ads. Best $20 I've spent in a long time. So, I don't see any ads on Kitco. As I recall it was by donation -- maybe, I should go back and donate more, as it has made the internet life so much more pleasant. Some sites have started fighting back, including NASDAQ, who for a while was making people do "stupid pet trick" surveys if they detected your using Adblock ... until they figured that people were giving bogus survey results out of spite. Who knows how long before sites defeat adblock. Enjoy it while it's still helpful.
Regarding Kitco ... Lacking PGM news coverage is an unfortunate change, but at least someone was there who seems to care that their Pd data integrity was lacking. Response from my e-mail:
"Thank you for your email and for bringing this matter to our attention. You are right and I have informed our IT team to verify pricing for both June 13 and June 14 and fix the charts for PD. "
SWC produces between 2-3 times the amount (oz) of palladium vs. platinum. The impact of Pd's price on SWC revenue is nearly twice that of Pt's.
Pd seems to behave part like a precious metal, but arguable in larger part like an industrial metal. So, in a global fear, risk-off mode, Pd (and by proxy, SWC) are not apt to fare well, all else being equal.
If you are interested in Pt as a risk hedge, then PPLT or PTM is a safer / more economical way to go than physical for all but the largest dealers / institutions. Chrome miners would not be a great choice for those envisioning global economic woes.
Be careful, nothing is a given. If the Fed starts raising in July, that could but a damper on metals prices, in general.
... and there lack of PGM reporting ... and now, accurate Pd charts. They have sure gone down hill, this year.
I found some spot charts at "Investmine". What other spot Pd charts do people here use refer to.
Physical what, though? If you thinking is that a US stock collapse or global risk-off mode is probable, then "maybe" physical gold would be a good hedge, not so much physical palladium. Even then, GLD is cheaper considering trading premiums and storage (costs or risks), than most physical.
For PGMs, it may be time to keep an eye on the wage negotiation in SA platinum belt. While strikes would not likely be drawn out like 2014, if announced, they could still move short term PGM pricing overnight.
I do not envision a significant market collapse in the next 6 months, but rather a summer pull back. I'm holding onto my core SWC, which is now at a very low average cost. For a hedge on Brexit / Fed / Summer lull risks, I've bought some short term UVXY calls. The ones I bought last week have more than tripled, today, but I didn't buy enough to make up for the my other stock's collective downturn -- barely enough to lesson the sting.
You may be right. OTOH, that might not be all that important to making money with SWC stock. I've been enjoying making some extra "dividends" on trading covered calls -- Selling when SWC gets close to $12 and buying back when it recedes. Not sure how many more rounds this pattern is good for, but it's nice while it lasts.
Yeah, they (NAP and BAM) appear to be between the preverbal rock and and a hard place. I have to guess that the BAM people managing this are getting some serious internal pressure not to keep throwing money down the money pit, but what are the alternatives? I can't see a lot of outside interest in NAP at these Pd prices, C&M also entails ongoing costs, and even shutting it down completely could cost upwards of $40-50M to rehabilitate. Seem the hopes they are gambling on are that the new, potentially riskier, block method will yield higher production level, and that Pd surges soon. But hope is not the best business plan. If neither happens it doesn't look good for anyone.
I disagree. I don't see NAP lasting four quarters without another infusion from BAM or someone else. When is the last quarter they only burned $4M? ... that didn't happen even when Pd was in the $800s. There is always Cap-ex needs, whether it has to do with tailing fixes, or expenses relating to the changes in mining methods, or needing to drill more because they aren't seeing the expect grade, etc. I've yet to see a quarter without some major need. Average cash burn over the last several years has been $25M per quarter. Even on the tightest budget, I don't see them getting through a full Q3 without a huge spike in Pd., and/or another infusion. Could be wrong ... we'll see.
Eventually, EV and/or HFC cars will gain momentum. Maybe, even the stadldlling bus will become a reality. But for when this impacts the Pd market and SWC, I just don't see a significant physical impact in the next 2-5 years, maybe longer. Investor sentiment impacts may come about earlier - maybe, it already has. Though, there is a good possibility that a physical shortage scare happens before physical demand wanes.
Again, we will see. When a company starts to accelerate production of a new (complex) product to the point where suppliers voice concern, corners are often cut, and much can and usually does go wrong. I would be shocked if they make their new 2017-2018 production goals without a major incident.
The straddling bus idea dates back to1969. I would think it might be unnerving to have the equivalent of a moving tunnel pass head over while driving ... could pose some safety issues. Chicago style Ls (elevated trains), while less cool, might be more practical -- they already have HSR in China for more popular routes.
We'll see. Talk is cheap. Given that a majority of the Model 3s, which were reserved this year will not even be produced until 2018, 1M in 2020 sounds like a lofty goal. A lot could go wrong in just meeting the 2018 targets -- parts production issues being one.
In the mean time, deficit markets still continue to erode the above ground Pd stock. My current time horizon for Pd related stocks in mid-term (12-36 months). I expect to see a significant surge in Pd prices in that time-frame.
Shorter term could go either way. If SWC falls below $8 this summer, I will probably add more.
I like your more sustainable vision. However, I get the impression that you've been around long enough to recall similar visions of the car-pooling / mass transit "solution" to that oil crisis of the 70's. Not saying that it isn't possible or worthy of envisioning ... just that it's probably not going to impact Pd in the next several years.