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Gold/Mining/Energy : North American Palladium(AMEX:PAL)- PGM Producer -- Ignore unavailable to you. Want to Upgrade?

To: Claude Cormier who wrote (479)	2/24/2000 7:32:00 PM
From: Dundee Maples	Read Replies (1) \| Respond to of 976

another opinion from kitco: Date: Thu Feb 24 2000 18:45 DJ (Palladium/platinum Thoughts) ID#6779: Copyright ¸ 1999 DJ/Kitco Inc. All rights reserved This is the chart I used for channels. I don't attempt to define channels anymore, with wild things happening in the metals. However, I thought some of you might be interested in a couple of observations. If I extend the rapidly rising trend line that palladium followed faithfully for several years, you will note that at $700, palladium is back to this line. ( By the way, the slope of this line represents an annual growth in the price of palladium of around 67%! ) . This gives some credence to the theory that this is not a spike, as most people assume, but a correction back to an established trend. If this is true, there are a couple of implications. First, anyone shorting palladium at this level may well be fried. Second, Stillwater, even after the steep jump, is still well underpriced. If one calculates Stillwater's earnings with the price of palladium rising by 67% per annum, on top of the planned growth in production, the profits get truly obscene. I won't even bother showing my detailed calculations, but the earnings per share in 2002 would be roughly $40. ( This ignores the effects of hedging, which I haven't factored in. ) Finally, there is NO WAY that platinum would be left behind. As quickly as companies could retool, they would switch to platinum, which is more efficient anyhow. However, platinum is even more rare than palladium, and its industrial uses are growing, so it shouldn't put too much of a damper on the price growth of palladium. Since platinum is lagging way behind palladium in price, it seems that the industry is convinced that we are seeing only a spike in the price of palladium, and it will soon drop back to the $500 level or lower. Note the line that shows the rising support line for platinum. Hmmmm ... It seems it is rising at 67% per annum. Curious. If these prices seems unrealistic to you, remember that most applications for platinum and palladium are not price sensitive. For instance, very little palladium is used in an individual catalytic converter, so the price of palladium has negligible effect on the price of a car.

To: Claude Cormier who wrote (479)	2/25/2000 12:07:00 AM
From: Ptaskmaster	Read Replies (1) \| Respond to of 976

Claude: I have a different view, that palladium use in autocatalysts is here to stay. As others have indicated, higher Pd price will have little impact on vehicle price. But natural abundance and timing of producer supply are certainly problems. Producer supply from Russia may diminish. The recent lack of Russian supply, contributing to disruption in the palladium market, would seem counterproductive. Alternative explanations might be considered. Perhaps the non-renewable palladium resource is being reserved for other roles, perhaps as collateral or other use in financing the current Russian budget. In that case, restricting exports and driving price higher enhances the value of the resource as a financial instrument. And if the stockpile is not forfeited, it may be sold another day. While this might be a real possibility, I'm not suggesting it is what is happening, just that we need to cast around for various alternative scenarios that fit the known facts. Natural abundance is an interesting issue. I'll check it out. Ptask