Platinum
Metal hit by Automotive industry downturn, economic slowdown and over production. Does the future look bright?
As the Platinum market is a very small one , with global demand in 2008 at only 224 tonnes & global economic conditions having deteriorated with every passing month in 2009, car sales and manufacturing activity falling to decade lows, unemployment at its highest levels in over 15 years, companies posting losses, car makers striving to survive and consumer confidence witnessing a record drop, the short term future for Platinum looks volatile . Although economic stimulus plans in Europe & by the new US government will help the dollar in the short term, the long-term outlook on the dollar remains bearish.
Panic and fear among investors about the global financial markets is leading to uncertainty. Growth forecasts globally have been revised downwards, with major developed nations expected to show negative growth. The IMF sees global growth slowing down from the 3.7% in 2008 to 2.2% in 2009. Advanced and emerging nations are expected to post a significant downturn in their economic activity.
Considering the downtrend in economic and industrial activity, the expectations on platinum demand growth are very low. Sharp decline in automobile sales and question over survival of major automakers are likely to result in to supply exceeding the demand in 2009. This is likely to keep prices under pressure in the short term. Economic measures to revive the slumping economy combined with cash injection steps are likely to improve the physical demand for platinum in the medium to long term (Q2 2009 onwards).
Economic and financial uncertainty is likely to drive investors towards precious metals such as gold, platinum etc.
SHORT TERM – NO TRADE
LONG TERM – BUY BELOW $1100
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