Why a “Number of Issues” in the Platinum Industry could send Prices through the Roof in 2013…
As I had correctly predicted last fall, platinum was on the cusp of overtaking gold once again in the precious metals race.
That day finally came on Thursday January 17th, when platinum reached $1,683 per ounce, surpassing gold at $1,675 per ounce.
In the weeks since, platinum hasn’t looked back.
And through the rumblings I’ve been hearing from within the industry… neither am I.
Although I am still bullish on gold, platinum investors could be in for a banner year as well.
Let me explain.
South Africa remains on eggshells following a number of strikes at the mines last year.
The conflicts taking place within the world’s largest platinum producing country have now led to tense relations between miners and the government as well.
The ongoing unrest and subsequent rising costs have forced companies to announce their intentions to halt operations at a number of key mines.
This could mount to tens of thousands of jobs lost.
Perhaps the most significant closures will come by way of a company that produces 40% of the world’s platinum.
Anglo American Plc. has decided to cease operation on four of their South African mines.
Needless to say, their announcement did not go over well with officials in South Africa…
In response, the government has threatened to relinquish Anglo’s operating permits altogether.
Here’s to kicking others when they’re already down.
Incoming Anglo American CEO Mark Cutifani says there are a number of issues with the industry – but revoking licenses is not the answer.
He is concerned that, in the midst of the mud-slinging, both the industry and government have lost sight of how their activities impact local communities.
While mining is extremely vital to a country’s economy, Cutifani believes the current model largely ignores those who live in the heart of the mining regions and are affected by their operations on a daily basis.
By not engaging with the local community to develop the local infrastructure or invest in social programs, unrest will persist and business will not be sustainable.
Cutifani described the government threats as “out of order” and that they “…shouldn’t be threatening licenses when a company is looking at preserving its life.”
Regardless of the bickering, the world’s thirst for platinum continues to grow.
Demand for the white metal is being fueled by carmakers, where vehicle sales are expected to rise by 0.5% in 2013.
Platinum is used in vehicle production primarily for building catalytic converters – consuming roughly 53% of all the platinum mined.
This is expected to further fast-track platinum, which has already risen over 12% in 2013 – the same advance for all of 2012.
According to Barclays Plc, platinum supplies will fall to a 13-year low as more mines close and automobile sales rise.
The closure of Anglo American’s mines would cut nearly 7% of global production.
With such a significant loss of supply for the coming year, platinum’s upward momentum shows no signs of letting up.
It’s unlikely that we’ll be seeing the industry iron out its problems anytime soon…and that’s going to be a major caveat for a platinum run.
I won’t be the least bit surprised if we hear of other companies announcing their own closures in the next few months.
Investors who buy in now could be in for a massive pay day in 2013.
for Top Stock Millionaire