Geopolitical and Labor Crises Will Continue To Drive Palladium Prices Higher [ETFS Physical Palladium Shares, ETFS Physical Platinum Shares]

PalladiumLiberty Gold Silver: For the last few weeks, one of the lead stories in precious metals news has been the various lawsuits and international criminal investigations of the world banking cartel’s alleged gold market price fixing. However, several key stories regarding another important precious metal, namely palladium, have largely been pushed off the PM news radar.

“A picture is worth a thousand words.” This is certainly true in the case of palladium. Please see below the last two months palladium chart.

palladium price daily 31 march 2014 price

As you can clearly see, in less than two months, palladium has moved from a low of $700 to a closing price Friday, March 28th, of $774, a gain of over 10.5%. Last year, palladium was by far the best performing of all the precious metals. What has been driving this upsurge in palladium and why does platinum’s little cousin stand an excellent chance of continuing to enjoy solid gains this year? The answer is fourfold: dwindling inventories , rising industrial and investor demand, giant labor unrest, and geopolitical tensions involving the world’s leading supplier, Russia.

1   Dwindling inventories – As a rare precious metal, there are very few palladium producing regions in the world and even fewer financially viable deposits. Currently, Russia and South Africa, which are known as geopolitically high risk countries, account for almost 80% of global palladium mine production. Russia has seen its above ground palladium stores drop dramatically over the last several years. In 2010, Russia’s above ground palladium inventory was believed to be in excess of 1.2 million ounces. By the end of 2013, their stored inventory was reported to have dropped to only 200,000 ounces. Even more disturbing was the forecast by Johnson Matthey and other refiners that there was a very real chance that Russia’s stocks might become completely depleted by the early fall of 2014. Russia, much like China, is notoriously private in publishing their mine output and refined stores of precious metals numbers, but these Johnson Matthey forecasts are believed to be quite accurate.

Platinum is typically produced as a by-product from platinum mines in South Africa (more on this shortly) and the Norilsk Nickel mines in Russia, which are located north of the Arctic Circle amongst some of the harshest conditions in the world. Industrial output at Norilsk makes up more than 2% of Russia’s GDP. However, Norilsk is recognized as one of the most polluted industrial environments in the world and its palladium deposits are believed to be slowly diminishing in ore content.

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