Sunday, September 20, 2009

Precious Metals May become less precious

Heck, why stick with just calling stock tops....lets call a bottom on the dollar.

Rarely do things look "clear cut" --but these do --and I am looking for some advice on how to play them.
COT reports show that large traders are positioned way short on Gold, Silver, Platinum, and Palladium. ''retail" or small futures traders are way long. It has to balance.
The big guys are probably right and the small guys are probably wrong. Plus the dollar IMHO is likely to rocket up and I am thinking the declining social mood is about to "make some news" -- flight to safety in a beaten down dollar may occur, this will drop prices on hard assets.

Gold is highly gamed by gold bugs and well, everyone. Silver is gamed also, especially by ETF and as poor mans gold.

So I want to take a short on platinum and palladium....futures look real illiquid. How to do it?

I pulled out my Tome "The Futures Game" by Teweles/Jones and can summarize some facts for you:

PGM= Platinum Group Metals, 6 closely related metals, platinum, palladium, rhodium, ruthenium, iridium, and osmium (wow--it's sure been a long time since I took chemistry!) These rare elements, often found in areas where gold, copper, and nickel are found--- function as "catalysts", in particular catalytic converters for vehicles.

Platinum makes nice rings and jewelry, but that is only about 5% of the total demand. Fully half of the platinum is used in the electrical industry, as a catalyst in fuel cells. 20% is for vehicles. It is also used as a catalyst in fuel cracking and processing.

One cautious thought on these rare metals. The Silver ETF certainly increased demand and prices for silver. There was talk of a platinum and palladium ETF in the US. There already are some in Europe.

An Aside: I like to look at news from the UK, and I do think their news has more truth to it than "news" in the US which is far, far too controlled by special interests. This hit me like a ton of bricks in the Iraq invasion, in which reporters were being "embedded" with the troops. Thats when it was clear that only the news that the powers that be wanted reported, would be reported. Hmmmm....does Embedded, mean "In Bed With"?


  1. Steve,

    I'll probably post this on ES at some point tomorrow, but wanted to share it with you tonight. I mentioned China as the potential buyer of the proposed sale of IMF gold, and after doing more digging around... although the IMF has made idle threats before on this sale, this time Congress did vote approval for the sale. Just something else to keep an eye on. The fun never ends!


  2. Keirsten, I guess in that case, one could sell puts and calls on gold related tickers and expect some price stability with China buying every dip.


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