Practicality a Thorn in Platinum, Palladium's Side

• By the tickerspy.com Staff
• On 12:03 pm EDT, Wednesday September 2, 2009

Gold and silver are behaving the way pure precious metal plays should today, moving higher on uncertainty in the equity markets, but more platinum's more practical purpose is pulling the commodity lower.

Platinum has an interesting mix of uses, from wedding bands to catalytic converters, and the impact of the latter has been a primary driver amid turmoil in the auto sector. The commodity is slipping fractionally today, as is its cheaper alternative palladium, which trades for less than a fourth of platinum's value.

Lacking appeal as an equity and dollar hedge, palladium is a more pure play on the use in the production of exhaust components for combustion engines. As such, the commodity had enjoyed a rally on the back of rebounding auto demand, but analysts worry the short-lived boost from the government's "Cash for Clunkers" program will cause a demand slump in the near term.

Platinum and palladium stocks are sliding across the board today, even as investors take flight to safety in equities tied to gold and silver.

Platinum Group Metals (AMEX: PLG - News) and Anglo Platinum (OTC: AGPPY - News) are both off by more than -3.5% today. Norilsk (OTC: NILSY - News) is also slipping in the platinum selloff, while Impala Platinum (OTC: IMPUY - News) has turned positive.

Meanwhile, Stillwater Mining (NYSE: SWC - News), North American Palladium (AMEX: PAL - News), and PolyMet Mining (AMEX: PLM - News) are bucking the industry's downward trend.

Anooraq Resources (AMEX: ANO - News) is slipping today, but remains ahead by 7.5% over the past five trading days. The company confirmed the effective acquisition of a 51% stake in Anglo Platinum's Lebowa mine early last week, according to Platinum Today.

While an uncertain outlook for the auto industry in the near term may weigh on platinum prices, BNP Paribas SA analyst Anne-Laure Tremblay thinks the price of the commodity will rebound to an average of $1350 next year, according to Bloomberg. In a report, the analyst noted that the current 280,000 ounce surplus could drop to just 30,000 in 2010. Bargain hunting investors can look to tickerspy's Platinum and Palladium Stocks Index for ideas within the sector.

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