Treasury Update: Is the Timing Right for Platinum?

It may be a shortened week, but already we’ve seen plenty of excitement. Monday saw a surprising spike in Gold prices, making a brief foray above $1,200, but with very little follow through, prices quickly retreated. I couldn’t find any explanation for this sharp jump in price, except that Mondays are notorious for thin volumes, and being the first day of the new month, we tend to see a fresh allocation of managed funds hit the market. Once again, Gold prices settled back into the regular trading range between US$1175 and US$1225.

Meanwhile, Greeks and officials from the ECB and the IMF remain locked in negotiations. Greece looks set to make a first repayment of 300 million euros to the IMF on June 5, but it’s still unclear how it will pay off the rest of its debt. The immediate concerns surrounding the looming debt deadline may have eased, diminishing part of gold’s safe-haven appeal, but it may not all be bad for Gold. If a deal is struck, its highly likely to see a resurgence in the Euro, driving US dollars lower and overall benefiting commodities. Last night’s upbeat German unemployment data and positive Greece talks saw the euro claw back 2.5% against the US dollar, its biggest gain in nearly 3 months.

Looking at other precious metals, Platinum has been the worst performing metal in the sector, sliding 1.4% through May. Palladium didn’t fare much better dipping 0.6%, underperforming Gold, which gained 1.5% and Silver, up nearly 4% on the month. I can’t find sufficient reason for the under-performance by the PGM’s, so I’m buying Platinum, particularly at current levels around US$1100.

By Adam Van Sambeek, Treasury Manager.

Flux or No Flux? Welding and Soldering Platinum

Credit: http://www.jmny.com/

Apart from the high temperatures involved, platinum alloys weld readily without the need for fluxes. Because filler metal, if needed, is the same as the components to be joined, it is easily possible to close the seam without any visible colour change. This is a decided advantage in sizing rings, for instance. Even so, it is good practice to minimise the amount of filler needed (whether welding or soldering) by making joints as closely and accurately as possible; platinum alloys do not readily bridge large gaps with filler metal (which is not pasty at any stage).

The absence of fluxes, except for the lowest melting point solders (where the flux is to protect the solder, not the platinum – see below table), means that the usual adhesiveness of flux cannot be used to support the solder paillons in place. In practice, a small amount of non-borate flux may be used for this purpose, although it is not necessary metallurgically. Alternatively, solder may be clipped in the joint or supported by a thin extension of stock wire that is allowed to melt free at the last moment.

Platinum Solder Guide

Why I believe Gold is on a Winning Streak and how this will carry Platinum up with it.

Gold backed up last week’s price gains, climbing back above our previously mentioned US$1180 resistance, reaching a 3 week high of 1195.30 overnight.  Prices are on course to post their longest winning streak since January last year, with investors backing bullion over the past few days because of a slump in the dollar after the Federal Reserve’s cautious stance on the US economy and diminishing likelihood of an early rate increase. The dollar remains the main driving factor of gold price and traders will be looking very closely towards (Fed officials’) comments to gauge when and how rapid the rate hike will be.

As manufacturers we’ve observed that, while bullion sales may have waned, weak prices have spurred an increased in demand of precious metal for manufacturing into jewellery, semi-finished and/or final products. This anecdotal observation has been supported by a recent report from New York-based CPM Group, forecasting an increase of over 4% in 2015 of fabricated Gold products. Marking the second straight annual rise, and feeding my optimism of higher Gold and Silver prices. Demand is still out there, just that we’re observing it in a different form.

In last week’s report I pointed out an opportunity in Platinum, “at US$1116, this is undervalued considering fundamentals” and suggested that buying with “a view that we see a repositioning in the market which will carry Platinum to US$1175-1180 resistance levels.” Today’s platinum price now resides around US$1150, so we’re witnessing this correction unfold. If Gold continues its test of US$1200, then we should see our Platinum target met.

By Adam Van Sambeek