Daily Market Update

Russian Sanctions May Create Serious Supply Shortages For Platinum and Palladium

Today’s AM fix was USD 1,362.50, EUR 979.37 and GBP 820.49 per ounce.
Yesterday’s AM fix was USD 1,379.00, EUR 992.37 and GBP 829.13 per ounce.      

Gold dropped $14.80 or 1.07% yesterday to $1,366.20/oz. Silver fell $0.28 or 1.31% at $21.13/oz.

Yesterday, gold snapped its five session winning streak as speculators took profits as tensions over Ukraine abated somewhat. Gold declined from a six-month high after U.S. industrial production increased more than expected, leading to a reduction in safe haven demand.

Bloomberg Industries

Traders await the outcome of the two-day Federal Open Market Committee’s meeting on Tuesday and Wednesday. Janet Yellen looks set to confirm that tapering will continue as will zero percent interest rates and ultra loose monetary policies.
Gold surged in recent days due to tensions between Russia and the West. The referendum over the weekend paved the way for Russia to annex Crimea. European Union foreign ministers agreed today to freeze assets and impose visa travel bans on 21 Russians and Crimeans.

The net-long position in gold rose 4% to 123,007 futures and options in the week ended March 11, the highest since December 2012, U.S. Commodity Futures Trading Commission (CFTC) data show. Short holdings fell 20% to 21,073, the lowest since October. Last week, exchange-traded products backed by gold climbed 0.7%, the third straight gain.

Silver fell 0.6% to $21.10 an ounce. Platinum fell 0.7 percent to $1,458.40 an ounce. Palladium gained 0.5% to $768.40 an ounce. Russia is the world’s biggest producer and exporter of palladium.

The continued supply side constraints for the platinum group metals (PGMs) should be supportive of prices and indeed could lead to new record nominal highs in the coming years.


Any sanctions imposed by the EU and the U.S. on the export of Russian palladium group metals would create a serious supply shortage that may be difficult for industries to replace. This year will show the third consecutive deficit year in global palladium supply, according to a Bloomberg Industries  survey of analysts.

Russia provided 44% of global palladium supply and 13.6% of platinum last year, according to Johnson Matthey.

A pick up in China’s demand for platinum group metals may offset any sanctions imposed on Russia by the U.S. and European Union countries. An increase of 26% sequentially in platinum imports by China in November suggests that domestic supplies are depleting. Russia has typically provided about 30% of China’s palladium imports and China may need to increase imports from the country as labor disputes in South African mines continue to affect production there.

In 2012, the platinum market was in deficit for the first time in eight years, as labour disruptions in South Africa led to about 600,000 ounces of lost production. These deficits may have grown in 2013, based on consensus, and bulls argue they will continue beyond 2014 as more disruptions and closures loom. Further, auto sales performance has been strong and the start of a new ETF has led a surge of investment demand. Tightness in the PGM markets is bullish for prices and makes a small allocation of platinum and palladium prudent.

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There are a number of key storage must haves and we have compiled the absolute benchmark allocated gold storage list that will enable those seeking an allocation to physical gold to evaluate potential bullion and more importantly storage partners.

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Mark O'Byrne
Executive Director


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