Platinum is looking unstoppable. It shot to a new record above $2,100 an ounce early this week as it became clear that power disruptions in South Africa, which comprises 75% of global production, could hamper output for years: power may not be fully restored to industrial users before 2012.
According to Impala Platinum, the world’s number two producer, this year’s global supply deficit could reach a seven-year high of 620,000 ounces. Meanwhile, above-ground stocks are already very low, and growth in the auto-catalyst sector is underpinning demand. “It is difficult to be anything but bullish”; there is scope for prices to gain a further $600-$800 over the next two to three months, says James Moore of TheBulliondesk.com.
Gold has eased to around $900 over the past few days. Rocketing prices put off buyers of jewellery and gold bars and coins in the fourth quarter, especially in India, the world’s biggest gold market. But Barclays Capital notes that overall investment demand remains strong. What’s more, it should be buoyed by higher inflation expectations, geopolitical tensions, further likely interest-rate cuts in the US – which imply a weaker dollar – and ongoing jitters over the economic outlook amid the credit crunch; gold is set to reach $1,000.
Meanwhile, silver’s “inextricable link to gold” (they have moved virtually in tandem over the past two years) is the main reason to expect silver to keep moving higher in 2008, says Merrill Lynch. The gold-silver ratio, still above its 50-year average, also portends higher prices for the white metal.