Platinum prices shot through the roof between January 23 and 29, with the April contract rocketing 15% as a result of power blackouts in South Africa. The world’s 3 largest platinum producing companies, Anglo Platinum Ltd, Impala Platinum Holdings Ltd and Lonmin PLC, were all forced to at least partially shut down production, along with most of the nation’s gold miners.
That prompted Lonmin CEO Brad Mills to proclaim, “2006 may have been the peak year of platinum production for a while.”
The current bull market leg in platinum is up 43% in 5 months and 12 days through January 28. This bull market is on the young side by historical standards. Bull market legs in platinum average 58% in 6 months and 11 days. An average advance from the nearest-futures bottom of 1226.50 last August 16, not coincidentally on the eve of
the Fed’s first discount-rate cut, would project to a price of 1938. What once appeared far-fetched is now here. Before the conclusion of this record shattering move in platinum, we’d like to see some genuine panic by the shorts. It would help if gold confirmed platinum’s new all-time highs.
After a sharp 9% decline in November,gold finally broke out above its January 21, 1980 record before surpassing the $900 milestone. Recently, the yellow metal pushed yet higher on steep interest-rate cuts, a weak dollar and rebounding crude oil and stock prices.
Historically, the average leg up in cash gold has registered 41% in 6 months and 4 days. Our market has
now rallied as much as 46% in 7 months and 3 days since the June 27, 2007 low, making this a mature leg. Normally, when a market takes out a decades old high, it has the potential to enter a price vacuum and move up
very quickly. Platinum, for example, has surged as much as 68% since exceeding its March 1980 record of $1045/oz. in early 2006. But gold has been in a bull market since early 2001 – almost 3 years longer than platinum
when that metal initially broke to all-time highs. That greatly diminishes the value of this indicator, as well as the likelihood that gold could move nearly as far above its former record as platinum.
Since platinum is the strongest of the metals and the 3 largest pltinum miners in South Africa are having problems, that makes our SWC Stillwater mining a very explosive stock.
This is just the beginning of the break out for SWC, jump on board.