Platinum Group Metals Ltd T.PTM

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Last Update: December 27, 2009 11:00 ET
PLATINUM SURGE EXPECTED

Platinum and palladium surged on Thursday as U.S. exchange-traded funds in the two precious metals came a step closer to reality, while a weak dollar lifted copper and oil prices.
The Reuters-Jefferies CRB index, a commodities bellwether that tracks 19 futures markets, settled the last trading day of the Christmas week up more than half a percent, after touching a one-week low two sessions ago.
Analysts said liquidity was thin across commodity markets, with many traders and investors deserting their desks as early as Monday to go on year-end holidays.
Yet the correction in prices which began with the dollar’s recent rebound gave players who stayed back a chance to buy in at lower levels and await price appreciation in the coming year.
“There’s a general expectation for 2010 and 2011 to be solid years and the funds … consider these prices to be cheap,” said Alex Heath, head of base metals at RBC Capital Markets in New York.
The platinum metals group rallied after a U.K. firm came a step closer to launching the first U.S. exchange-traded funds on the precious metals which are used to purify auto emissions.
The U.S. Securities and Exchange Commission approved a proposed rule change on Tuesday to list and trade shares of the Platinum and Palladium Trusts proposed by London-based ETF Securities, the SEC’s website said on Thursday.
U.S. platinum futures for January settled up nearly 3 percent at $1,467.90 an ounce. Palladium for March finished up 9 percent at $389.65 an ounce.
Analysts said they anticipated a rush of investment dollars into platinum and palladium if ETFS is given the final nod to list on the NYSE Arca.
“The ETF story is interesting because … it doesn’t take a lot of money to make platinum and palladium move up,” said George Gero, vice president with RBC Capital Markets Global Futures in New York. “This comes at a time when the automobile industry is making noises about recovery.”
According to industry data, more than half of the world’s platinum supply is used in making the catalytic converters that clean the emissions released by motor vehicles.
Copper jumped to near 16-month highs in New York and a 15-month peak in London as a weak dollar, supply threats in Chile and pre-holiday momentum buying combined to drive prices up in thin volumes.
U.S. copper for March delivery peaked at $3.3040 per lb, its loftiest level since late August 2008, before settling up almost 3 percent at $3.2925.
Benchmark copper on the London Metal Exchange ended up $70 at $7,070 a tonne in kerb trading. In after-hour business, prices of the metal used in power and construction peaked at $7,167, a hair below a recent 15-month top of $7,170.
U.S. crude oil rose nearly 2 percent to top $78 a barrel for the first time in three weeks, buoyed by economic optimism that sent Wall Street to a 2009 high.
Oil was also supported by data showing lower U.S. crude oil inventories, traders said.