Platinum price forecast and predictions for 2010
My prediction is that platinum price is going higher, possibly hitting $2,000 USD by September. Too bullish ... may be, but I base such a platinum price forecast on a simple supply and demand situation. 2010 can be one of the best years for precious metals in general, not just platinum. Gold, silver and palladium should perform admirably, both as hedges against falling currencies and that includes U.S. Dollar besides every other paper currency, and as jewelry materials whose popularity and trends vary widely around the world. There are many optimistic predictions for them, but platinum is at whole different level because of its scarcity and few suppliers, so my price forecast for this metal is quite modest.
Platinum price forecast for 2010 - growing demand
As you see from the above chart, platinum price fell below $800 USD per ounce last October, actually it was as low as $732.50 - huge drop from the all-time high of $2,290 an ounce, because of the economic slowdown, but today it stands around $1,735. The price has recovered very nicely as demand for platinum jewellery and catalytic converters, particularly in China is increasing. And safe heaven seekers are turning to platinum more and more.
Here are some interesting facts that will likely force you to look at platinum differently and understand why my bullish price forecast for 2010 and beyond could turn to be very modest indeed.
There are very optimistic predictions for growth of industrial demand in catalytic converters used for diesel engines, where until very recently, platinum was just about the only metal that could be used. The number of diesel vehicles around the world has increased quite a bit. In 2000, diesel accounted for only 18% of global production of light vehicles, but according to Wikipedia, as of 2007, about 50% of all new car sales in Europe are diesel.
Physical Platinum Exchange Traded Funds insured by actual platinum bullion, meaning such ETFs must hold physical platinum rather than stocks or bonds, have appeared on several major exchanges, and gobble hundreds of thousands of ounces of physical platinum, driving prices dramatically higher.
Platinum price predictions - 2010 supply shortage
Like it or not, South Africa platinum miners still account for three-quarters of global output, with Canada, Australia and Russia making up the rest. In its research note dated around August 2009, Bank of America explained how the fall in platinum prices that we mentioned in the beginning and is shown at the chart, led to cuts in miners capital expenditure and could result in a supply shortfall in the future. The same note had platinum price forecast for 2010 with an average $1,350 USD an ounce.
The fact, however is, that South Africa has been more concerned with 2010 soccer World Cup which is scheduled to take place between June 11 and July 11, boosting infrastructure spending on roads, railways and stadiums for the last 4 years, than making sure that the state power utility, Eskom, would build enough power plants and improve power grid to guarantee power supply for platinum mines. And this is despite the rise in prices. Besides, several South African mines were closed because of various reasons.
Platinum price to increase - Chinese demand to skyrocket
While Chinese citizens bought huge number of cars in 2009, selling some 13.6 million vehicles according to The China Association of Automobile Manufacturers, the year 2010 promises even higher sales. In comparison, Unites States auto market had only 10 million vehicle sales but that just may improve somewhat as GM is looking to hire more workers to ramp up production. But when you look at production goals for 2010, published by the largest car makers in China, you realize that platinum price is bound to increase. Just consider these:
- Hyundai-Kia aims for total China sales of 1 million this year - a 23% jump from last year,
- GM China is aiming to produce 850,000 vehicles - a 15% growth from last year,
- Dongfeng Nissan increases its 2010 sales goal to 600,000 vehicles - an 18% growth,
- BYD has a goal of 800,000 sales - a whopping 50% jump over 2009 numbers,
- Chery 2010 goals is 700,000 units, which is 40% higher than in 2009,
- Brilliance wants to sell 500,000 vehicles in 2010 - a 44% increase.
With that said, you must take into account some scrap platinum and much higher recovery of metal from user catalytic converters. Other market conditions can change in a blink, still, I stand by my platinum price forecast for 2010.
Previously,
Silver price predictions - silver prices forecast 2010, 2011
Gold Price Direction - Gold Prices Forecast 2009 - 2010
Thu Apr 29, 2010 11:04AM | Copyright: www.bad-credit-advisor.com | More in Gold Investing | Comments (0)
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