>I just used a jewelry B2B site to order finished channel set platinum anniversary bands in various weights and qualities.
Glenn, several years ago palladium bull, James dines told me to buy all the platinum and palladium I could.
It was good advice...don't you think?
Btw
Ike and Gst should also be interested in this article.
>August 6, 2000
It's one thing to be a riverboat gambler. It's quite another to be a Volga River-boat gambler.
With great volatility, prices of palladium have been going through the roof, and Russia sells about two-thirds of the world's palladium.
"Russia is totally broke and will do anything for money," says Kennedy Gammage of the Richland Report in La Jolla.
Also, since so much of Russian commerce ends up in the hands of the Mafia, there is even more risk of getting short-changed, Gammage says.
Ah, but it's worth it -- and then some -- says the nation's foremost palladium bull, James Dines of the Dines Letter in Belvedere. "There is no doubt palladium will go higher than $1,000 (an ounce)," Dines says, noting that "we are still in the early stages of the move."
Then Dines shares a real shocker: "The Japanese don't have a palladium stockpile. They are desperate for palladium. If there is a shortage, the Japanese will have to stop producing cars."
Some analysts think the Russians are playing a game of chicken with Japan, trying to force the Japanese to sign long-term contracts at very high prices.
If the Japanese rumors are at least partly true, as are other similar rumors, the price pressures on palladium should continue to be startling, says Dines, who first put his readers into palladium at $165 an ounce in 1995. (He was also early in the Internet stocks, but is now recommending them only selectively.)
"Platinum and palladium tend to be discovered and mined together," says Dines, who notes there is also a raging bull market in platinum. Of course, platinum has a history of market volatility, too.
And Russia provides 20 percent of the world's platinum.
The price of palladium hit $859 on Wednesday, but plunged 7 percent Thursday on speculation Russia would resume exports to Japan, and then dropped below $800 -- although that's still very high. On Friday, the New York Mercantile Exchange said it will raise margins for palladium futures contracts ninefold. Talk about volatility! Or Volga-tility.
Russian exports of palladium fell to 5.4 million ounces last year from 5.8 million in 1998, even as worldwide demand shot to 9.4 million ounces.
After four consecutive years of export disruptions from Russia, the price of palladium has more than quadrupled since 1997. But it has been a bumpy ride. In the second half of this June, prices slid from $685 an ounce to $618 because the Russians increased their shipments.
When the shipments dropped again, the price shot up about 33 percent.
Why the demand for palladium?
It's a key component in catalytic converters -- It's "absolutely vital for the anti-smog devices in automobiles," Dines says -- and it's used in cellular phones, laptop computers and multilayer capacitors.
"There is inelastic demand," says Richard Russell of Dow Theory Letters in La Jolla. "With the need for catalytic converters, usage is going beyond production."
If you want to get in palladium, how do you do it?
Playing the futures contracts is no game for those with weak stomachs, but Russell says he "would play the futures, although they tend to be volatile."
Dines has other ideas. "Futures are not for the average person," he says. "They are volatile and thinly traded."
Dines likes certain palladium stocks, and he cites Stillwater Mining in Denver, which owns the largest and highest-grade ore body in the world. "Every time palladium prices go up, the value of (Stillwater's) wealth in the ground rises commensurately," Dines says.
One prominent Wall Street analyst figures that Stillwater could earn $7.50 a share in 2002.
Nonetheless, even as palladium prices are soaring, the price of Stillwater stock has been going down. That's because management has failed to produce the critically-necessary 700,000 ounces a year, explains Dines, who remains bullish on the stock.
"Stillwater is a piece of junk," Russell says. "Actually, there are no great palladium mines."
Meanwhile, Gammage says that playing the "futures market is too wild. Playing commodity futures is tough enough in any case."
Gammage also likes Stillwater stock. "There is no political risk there," he says. Russia is chaotic and the second biggest producer, South Africa, has its problems, he notes.
Both Gammage and Russell have questions about the quality of the Russian mines, as well as the ethics of marketing tactics. "Some of those mines are in terrible shape," Gammage says. "And you can always trust the Russians to be Russians -- to screw you when they can."
Russell says the Russians are either inefficient or squeezing prices. "I think they are holding back on supply," he says.
RAO Norilsk Nickel, the world's top palladium producer, has warned of a looming shortage of the metal because so few shipments are coming out of Russia.
The Russian government sells palladium from the country's precious metals reserve or central bank stockpiles. To no one's surprise, Russia's central bank stockpile, the palladium reserves, is classified a state secret. |
