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Column: Miners' strike pops platinum

Breitinger

Platinum prices exploded higher this week, catalyzed by a deadly miners’ strike in the world’s third-largest platinum mine. The conflict, which involves two competing miners’ unions, has claimed 34 lives so far and threatens to destabilize platinum production in South Africa, which accounts for three-fourths of global platinum output. As a result of the violence, prices rumbled $80 per ounce (+ 6.1 percent) higher this week, to $1,470 on Friday.

Longer term, platinum prices are still severely depressed, down more than $400 per ounce (25 percent) during the last year. About a third of global demand for platinum comes from the automotive industry, which has been slowing globally. As a result of diminished demand, platinum prices have been slipping, especially compared to other precious metals.

Platinum has been cheaper than gold for most of the last year, a constant reminder of the tepid global economic outlook. Just before the strike, platinum was as much as $220 per ounce cheaper than gold (14 percent), a historically low valuation. As recently as 2008, platinum was worth $1,200 more than gold, 2.4 times more valuable than gold at that time.

Longer term, demand for platinum will depend on a strengthening of the global automotive industry, which does not appear to be happening soon.

Crude careens higher

Crude oil prices rallied to a three-month on Friday, reaching $95.91 per barrel amidst fears of crimped global supplies and strong U.S. crude oil demand.

The primary focus of energy traders continues to be the Mideast, where attention is centered on the civil war in Syria. There are concerns that nearby countries like Israel, Lebanon, Turkey or Iran could be drawn into a greater conflict that could destabilize crude oil production throughout the Mideast, which provides nearly a third of global crude oil.

Weekly petroleum inventory data from the Department of Energy also showed a larger-than-expected drop in domestic supplies and implied the strongest level of U.S. crude oil demand since last November.

Crude oil was further bolstered this week by positive U.S. economic reports on consumer sentiment, jobless claims and leading economic indicators, all of which hinted at a continued healthy demand for crude oil. As of midday Friday, crude oil for September delivery was worth $95.80, up $3 per barrel (+ 3.2 percent) on the week.

Opinions are solely the writer's. Walt Breitinger is president of Breitinger & Sons LLC, a commodity futures brokerage firm in Valparaiso. He can be reached at (800) 411-3888 or www.indianafutures.com. This is not a solicitation of any order to buy or sell any market.

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