because platinum is deeply troubled ;0/
and because platinum is energy, and is beautiful
whereas gold is only decorative after it has served its monetary parachute function
Fm: J
Time: 2011?08?16? (??) 1:11 PM
Re: Comments - Week of August 15
if gold can go to 12k, platinum can reach 12k
as the two are more or less at 1:1 pricing, buy both, then buy more
(i) am hence forth to deep-store 50% of all profits generated from trading of gold / gold mining / and gold-related derivatives to gold physical metal (reducing from 10 years of 100% allocation of realized and take-off-the-table profit
(ii) the remaining 50% of all gold related profits shall be redirected to deep-storage via platinum physical metals as and whenever available (increasing physical platinum accumulation, enhancing earlier program of just limiting physical platinum buys to amounts realized via paper platinum trades)
because of very unfortunate but true-enough macro ...
(a) seekingalpha.com
- s.africa produces 85% of global platinum (45% of planet palladium)
- s.african domestic coal is deeply subsidized relative to export-bound coal
- indian uses far less coal than china on per capita basis, and has far less domestic supply, running an import, increasingly from s.africa
- south africa electricity pricing is at 1/3 of global norm
- producing the strategically precious and industrially important-enough pgm requires much electricity
"Mining and production of PGM metals is extremely energy intensive. According to data from major platinum producers, it costs roughly 1x10^10 joules of energy, or 2778 kwh of electricity to produce just one troy ounce of PGM metals. That's only direct energy cost. Count in exploration and development of mines, mining equipments, and labor cost etc, the total direct and indirect energy cost could be 5 times higher at 13890 kwh. If fair cost of energy is US$0.15 per kwh, then the fair cost of PGM metals should be at least $2100 per ounce."
- if fair cost is usd 2,100, then fair price is north of 4k, i reckon
- accumulating platinum is like storing south african electricity, front-running indian coal supply, leveraging on china energy growth, staking a position on all activities that require platinum, and taking a free option on all future uses of platinum
(b) additionally, and very shockingly tragic, per south african associate's inadvertent guidance, south african mining and south african society is in deep trouble
newsfromafrica.org
"According to Debswana's corporate communication manager, Jacob Sesinyi, an HIV/AIDS infection survey conducted in early 2001 revealed that 35 per cent of its employees were infected with the virus."
(c) anecdote: the situation in s.africa is no different, and supposed worse (52% by unofficial numbers). companies are having difficulty employing previously available miners w/ 10+ years experience (average experience of miners used to be 15+ years), and now must settle for miners with average of 3+ years experience. worse, the corrupt government is hiding the magnitude of the problem.
also, apparently the turn over of miners is seriously straining the mining companies.
so either the world stops using platinum (no way)
or china and india stops growing
or america starts export of coal to china, and china to india
or alternatives catalysts found to replace pgm and no new uses are found for pgm
and whenever south africa addresses the problems of miner health, re-balance the issues of energy subsidies
pgm cost must rise and keep rising.
Fm: M
Time: 2011?08?16? (??) 12:09 PM
Re: Comments - Week of August 15
jsmineset.com
Jim Sinclair (who calls for $12,000+ gold):
My Dear Extended Family:
Now that we have reached $1752.20 gold, what should you do?
Stay firm in your disciplines. During this entire market chasing strength in gold has proven dangerous more often than not. Angels should be looked at for the mad trader as areas to lighten, not double up. You can win this game with a ruler, but you will have to stay up 24 hours a day. We have not had a blow off top in gold but there has been epic short covering in world markets. That type of action weakens short term markets. The best buys now are identified by a simple ruler with more complex firming internals.
The holder of the right position that shows the patience of Seligman and Livermore always take the greatest prize. Gold has made no meaningful top, but volatility has only one way to go and that is up. Our respected colleague Alf Fields would agree that traders better have karma on their side, but the gold market is nowhere near full valuation. Be careful traders but stand strong those of us who have hedged against the insolvable problems of the entire Western World. Your successful protection is my reward greater than money, greater than matter. See you in the morning.
1. Those holding gold to hedge the systemic risks of the Western Financial world simply stay in your position.
2. Traders lighten up your positions as gold approaches the next two Angels.
3. No market fails to have reactions at some point.
4. Reactions in this market will be deep, but brief when they occur.
5. The undervaluation of good gold shares has passed manic.
6. Utilization of some of your gold profits into good gold shares is pure logic.
Respectfully,
Jim |
