Precious Metals and Shipping: Some Recent Developments 46 comments
-
Font Size:
-
Print
- TweetThis
Gold rush 2009 is on, as gold is the front-runner in precious metals, so far. Gold is now only 10% away from its early 2008 high; silver is off 39%; platinum is still off 57% from its high; and palladium is still off 67%.
Don't buy the front-runner, buy the laggard, palladium! Chasing the front-runner and big crowds is the fastest way of losing money. Just look at recent bloodshed in DryShips (DRYS), a front runner in shipping stocks. I switched from DRYS to Excel Maritime Carriers Ltd. (EXM) and cautioned about DRYS in mid-January 09. So, I was lucky to have avoided the massacre in DRYS. There are inherit problems in DRYS that are now exposed, but big crowd sentiments added to the severity of plummet.
Gold is currently the front-runner of precious metal because most people know what gold is, but few people have heard about palladium. Recent stories from Russia and South Africa indicate that palladium and platinum have the most bullish fundamentals among precious metals, while gold has the weakest fundamentals.
First, let’s look at palladium. Norilsk Nickel (NILSY.PK), the producer of 45% of the world's palladium, just released its Q4 and full year 2008, production numbers. The palladium production dropped to 2.702M ounces, much lower than the 3.05M ounces in 2007, even though the nickel production is in line with 2007. Norilsk expects another drop of 7% in palladium production in 2009 to bring it down to about 2.5M ounces. The reason cited is lower grade of PGM content in the ores. I explained before that Norilsk has two types of minerals: the one high in nickel and low in palladium content, and the one low in nickel and high in palladium. Due to current low nickel price, they must opt to mine the high nickel ores, hence produce less palladium.
Base on my calculation of its mineral ores grades, if company produces the highest nickel grade while maintaining the nickel production level, the 2009 palladium production could only drop to 2.0M ounces, from 3.05M ounces in 2007. It is more likely that Norilsk will be forced to cut nickel production in order to meet weaker global demand. In that case, palladium production could fall significantly below 2.0M ounces.
Adding to the bullish case is news from South Africa of a looming mining worker strike to protest against the job cuts. I think the mining companies there, hurt by low PGM prices, and would LOVE to see the strike proceed in order to drive up the metal prices.
The bullish case of palladium cannot be better. Looking at the supply/demand picture starting with data from Impala Platinum (IMPUY.PK), we are talking about a global demand of roughly 8.215M ounces. On the supply side, South Africa could provide roughly 2.2M ounces, if current production cuts are implemented, Russian would provide 2.0M ounces, North America would provide about 0.33M from Stillwater Mining (SWC), other sources count for about 0.3M, and there would be little recycling as a low palladium price discourages recycling.
In summary, we are looking at about 4.83M in palladium supply, versus 8.215M in industrial demand, not counting any investment demand on the physical metal. The deficit will be 3.385M ounces, or 41% of industrial demand. No other metal has such a large margin of deficit! Remember, a less than 4% deficit in rhodium was all it took to drive the metal from $300 to $10000 per ounces! What would a 36% deficit in palladium do to the price? What would investors do, when they jump on the palladium shortage wagon and help drive up the price?
Keep in mind that the Russian Government is trying to help Norilsk Nickel with its financial difficulties due to current low metal prices. There has been talk that the government would purchase some of the precious metals from Norilsk Nickel and re-stock the government's depleted strategic stockpile. The Russians could easily drive palladium price up to $2000, $3000 or even $5000 per ounce, if they so choose. I don't see why not as they want to make money just like everyone else does.
In 2000/2001, one false rumor that Russian government was terminating the annual palladium stockpile sale, and the ensuing panic buying, drove up the price of palladium from $300 to $1100 per ounce. There was only one investment fund that noticed the palladium rally, and profited from it, because at the time, gold was at its low and there was no interest in precious metals as safe haven assets.
Today, the reality is that the Russian government stockpile sale has ended, and Norilsk's palladium production is down. The Russian government may be buying the metals to help Norilsk, as well as replenishing its strategic stockpile. As the current financial crisis unfolds, there is plenty of interest in all precious metals as safe haven assets. Rest assured, this time, there will be a lot more investment interest in palladium then last time. It's not too late to buy physical palladium, or to buy some of the world's primary palladium producers, Stillwater Mining Company (SWC) and North American Palladium (PAL), stocks.
I am openly calling these two companies to consider how they can help the average investors to acquire the physical metal easily, and as a result, be able to participate in, and gain from, the coming palladium boom. I believe that the precious natural PGM resources are NOT the private properties of mining companies, but belong to the people. These two companies, blessed with the privilege to produce the natural resources, have the social responsibility that they must maximize the value of the metals they produce in order to pay back the community.
Likewise, the U.S. and Canadians governments have the responsibility to ensure any minerals produced from their soil must maximize the values and must not be sold below cost. If the metals are priced below cost, then the governments should purchase and stockpile these precious strategic metals. The Chinese government is already stockpiling strategic metals to protect its domestic mining industry and take advantage of recent low commodity prices. The U.S. and Canadian governments must do the same for their respective national interests.
Let’s look at gold, now. The current price of gold is about $900 per ounce, which I believe is fairly priced since most gold mining companies are making comfortable profits. I believe there is now no good reason for the average Joe to buy gold at this price. Joe makes $40K per year, or $28K after taxes, which means he makes $112 per workday after taxes, so, in order to buy a single, one ounce gold coin, he would need to work at least eight full workdays in order to earn enough money to pay for it.
Joe might as well take eight days off to go prospecting for gold, since some gold prospecting web sites claim you can collect up to two ounces of gold a day. This sounds like a better deal than having to earn a salary to buy gold. The economic incentive to prospect for gold rather than to buy gold puts a reasonable natural cap on gold price, in terms of purchase power. However, silver, platinum and palladium are different as you can NOT prospect for these other precious metals, as a result, these other precious metals should have more room to make gains.
My only advice is stay away from ETFs like streetTRACKS Gold Shares (GLD) and iShares Silver Trust (SLV) and buy physical metals and precious metal mining shares, instead. After browsing through their physical metal bars serial number lists, I became suspicious of these two ETFs. I will not elaborate here, but it you have some time, scrutinize the lists yourself, and see if you find any red flags.
What is happening in shipping and what about recent bloodshed in DRYS? The Baltic Dry Index (BDI) has been going up strongly for TEN consecutive trade days in a row, and has now reached 1099, up from its low of 666 on Dec. 4, 2008. How often do you see something going up 10 days in a row? That says that shipping is recovering strongly, and indicates that last year’s drop in shipping rates was largely due to credit crunch freezing up trading activities, and was NOT due to supply and demand. As the credit now eases up, there will be pent-up demand to clean up the goods previously piled up on harbors.
The short-term outlook of dry bulk shipping is bullish, while the long-term prospect is even better, as governments around the world, particularly China, are preparing gigantic economic stimulation programs.
What do I think about DRYS's recent plummet? The panic was caused by DRYS's disclosure that two banks notified it that it was in breach of the loan covenants, as the fair market value of its ships has fallen below a certain percentage of the debts, and that DRYS was trying to raise $500M cash by selling shares in the open market, hence dilute the share value.
I do NOT think the loan covenant thing is too much a deal. How do you define a ship's fair value? I think any physical property's fair value is its replacement cost, but the convention is use recent market transactions of similar properties to determine the "fair market value." I think such terminology is ironic! The market is never a fair place to begin with, so the word "fair" and "market" don't naturally go together. Why would it be a "fair price" when under financial stress, a ship owner is coerced, into selling its ship at a price that is far below its inherit value? The unfair price is then used as "fair price" in order to undercut the assets of everyone else and force many more defaults and stress sells, further escalating the crisis. This unfair "mark to market" rule results in distorted values of physical assets, and is one of the major culprits in the current crises in real estate and other sectors. It must be abolished and replaced by a "mark to cost" rule.
In light of the continuous surging BDI index, the value of ships goes up with BDI. Banks know this and don't want to bring an unnecessary crisis upon themselves. Instead, they will work with shippers to find acceptable solutions to the loan covenants because it’s in their best interest to do so.
My biggest worry about DRYS is the ongoing selling of its shares in order to raise $500M, which will greatly dilute their value. No one knows how much dilution will occur, so even though DRYS has become much cheaper, I would advise waiting a little longer, until the dust settles, in order to see what the share dilution factor really is. In the meantime, I believe other shipping stocks like EXM, Eagle Bulk Shipping Inc. (EGLE), Genco Shipping & Trading Ltd. (GNK), Diana Shipping Inc. (DSX), TBS International Ltd. (TBSI) and Navios Maritime Holdings Inc. (NM) are better buys than DRYS, until we know more about DRYS's share dilutions. For the same reason, avoid OceanFreight, Inc. (OCNF), for now.
Full Disclosure: The author is heavily invested in SWC, EXM and EGLE. I also own shares of OMG, PAL, TBSI, DRYS and USO. I do not own other stocks mentioned but positions may change at any time.
Related Articles
|
-
The Seeking Alpha 100
See allThe top 100 stock
market authors
selected for publication
Seeking Alpha 100 » -
Fastest Climbers
Authors with the largestSee all
increase in followers
in the last 7 days
Fastest Climbers » -
Top Commenters
Top commenters,See all
as ranked by their peers
Top Commenters » -
Top Instabloggers
The 100 most active
Instabloggers.-
1
TraderMark
-
2
Don Dion
-
3
Cliff Wachtel
-
4
Mike Havrilla
-
5
James Quinn
Top Instabloggers » -
1
-
Top StockTalkers
TopSee all
StockTalkers.
Top StockTalkers »
This article has 46 comments:
Right on! Couldn't have said it better myself.
The only benefactor in mark to market is the untaker and the shorts.
The fact that it has taken 10 days to move up 50% only means it is going up against stiff resistance.
"Chasing the front runner", even if BDI moves up another 20%, it will still be down 90% and shippers will not follow in lockstep.
But They may stabilize. Cash on Hand and relatively debt free is my motto in this industry.
Obama's "Buy American" could backfire big time with Buy Indian, Buy German, Buy Chinese etc.
The dry bulk industry could be in for really hard times in the future.
Not so sure that "average Joe's" are not buying gold. I know more than a few who are buying as many gold coins as they can afford, and it is not because they expect to get rich from it. They are very concerned that if they don't, they might end up with nothing. I have never seen so much interest in gold from "average Joe's". Yes, this is just anecdotal evidence, but even so.....
You maybe wrong concerning "Buy American" because other countries are doing the same thing. Also, this is only just about the Stimulus Package, not other regular business activities.
As for shipping, you are too pessimistic and please remember, in normal world economy, Ships are KINGS & QUEENS of the Sea.
Maybe a lot? So is a short trade I guess, anyway you have been cheerleading so long on this, I just wish you the best, just for your perseverance!
for those of you, watching the market (locally and in chartland) unable to decide what to invest in (or whether you should or not), as well as the Survivalists
Some good (cheap) ultra-back-up investments might be in
-Cigarettes / Heirloom Tobacco Seeds
(ex. newhopeseed.com/to.../)--
Worst Case Scenario: History shows, such as in post-Soviet Russia, that cigarettes work well as a valued unit of exchange
Best Case Scenario: Open an E-Bay Store and work on your salesmanship ;)
-Heirloom Vegetable/Legume Seeds
(ex. survivalistseeds.c.../)--
Worst Case Scenario: History shows, its good to eat every now and then.
Best Case Scenario: Finally garner those gardening skills and taste what you've been missing (by likely buying food that's already been halfway around the world)
NOTE: Any seeds you purchase, make sure they're heirloom (so that they continue to germinate (produce further seeds on successful planting))
www.danforthdiamond.co.../
www.stillwaterpalladiu...
images.google.com/imag...
Demand from automotive uses only constitutes about 50% of palladium's total demand.
On Feb 05 02:16 PM Alex Filonov wrote:
> Palladium is used exclusively as an industry metal. There is no known
> investment or jewelry use. Most of industrial use is in auto catalyst
> converters. Most of companies use platinum, not palladium. So by
> buying palladium you depend on couple (maybe three) auto companies.
> Depending on auto industry is a very bad bet now, depending on small
> number of players is even worse.
Palladium: An Investable Metal That Defies Physics
seekingalpha.com/artic...
sible to me.
On Feb 05 03:07 AM sittingoutthisrecessio... wrote:
> First, a disclaimer: I am not a gold bug and have never bought any
> gold before. Considering buying some just in case, not for investment
> or some sort of market timing trade in an attempt to make a few bucks.
>
>
> Not so sure that "average Joe's" are not buying gold. I know more
> than a few who are buying as many gold coins as they can afford,
> and it is not because they expect to get rich from it. They are very
> concerned that if they don't, they might end up with nothing. I have
> never seen so much interest in gold from "average Joe's". Yes, this
> is just anecdotal evidence, but even so.....
youtube.com/watch?...
and volume 2 of this same video release at youtube.com on January 4 2009
youtube.com/watch?...
Look at my article on DRYS and Shipping at Motleyfool.com caps.fool.com/Blogs/Vi...
caps.fool.com/Blogs/Vi...
Normally when a stock gained 25% a day or doubled in a few weeks you question whether it has run too far too fast. But in the cash of dry bulk shipping, if you truely understand the fundamentals, shipping stocks recent movement still far far lags behind the movement of BDI shipping index.
The BDI has been up 13 or 14 days consecutively with strong daily moves. How often do you see something going up 14 days in a row?
You need to read the original flavor of this article, following this link here. It contains some sector which had to be removed on Seeking Alpha to make the article more concise:
stockology.blogspot.co...
Enjoy the rally! BTW I do think it is time now to buy back some DRYS shares now that it lags behind other shipping stocks.
The BDI has been going up steadily. This too is likely to cause DRYS to rise. For this reason, I think now is a good time to get into DRYS while it is beaten down. It is really the same stock that was recently selling for $15+. At $6 it is a bargain. The dividend distribution of Ocean Rig was valued at approx. $30 per DRYS share by Mr. Economou last year. If you cut this down to $10 (conservative with the current number of outstanding shares), you still have $10, plus the value of the DRYS shipping business. If you acknowledge that the DRYS shipping business is the primary factor in the DRYS share price evaluation, you are probably getting another $15+. I think you can see why I think DRYS is a good value.
DRYS has already renegotiated its loans with Piraeus (one of the two banks to which it was in default of its covenants). This new agreement seems very favorable to DRYS. They extended the repayment terms. I expect DRYS will be able to renegotiate with the other bank too. Plus DRYS is now out of huge deals to take delivery of many capesize ships in 2009. Long term this may mean that DRYS growth will be a little stunted. However, short term it means that DRYS is in a much less precarious financial position. It will not have to worry about whether any of those capesize ships will be idle in 2009.
RIG recently negotiated long term contracts for 3 of its UDW drilling rigs at about $500,000+/day with Reliance of India. These cost only about $150,000 to operate, so there is still great profit in this business. Oil should also come back as the economy does. This will again light a fire under the deep sea oil drilling business, as deep sea will likely be the arena for the major new oil field discoveries. RIG et al have bottomed recently. They may bottomed again???? However, they seem likely to go solidly upward after this year. The Ocean Rig spin off should do well as it tags along for the ride. For the moment the two existing UDW rigs they have are under long term contract (one for $673,000/day).
Thanks for your comments. You surely have done a lot of research on DRYS and I agree with what you said. The biggest worry of DRYS is not the loan covenant, but how much it will be diluted due to the $500M stock sale. How much the dilution is depends on how much the average sale price this $500M share sell ends up at. The higher the average share price, the less shares will be sold to meet the $500M goal, and the less will be the dilution.
As you said:
1. DRYS do not need to sell a full $500M, they can stop at any time and call it enough. However I think it is unlikely they will stop short at $500M cash, as they need the cash for later of the year when some loans are due.
2. The BDI has been going up strongly so have shipping stocks in general. DRYS may decide to wait and see to try to sell the shares at much higher price so as to reduce the dilution factor.
The Deep Ocean Rigs is a very important part of DRYS's valuation. It would be valued even more when oil price starts to recover.
In any case I agree now is time to buy back some DRYS shares. I plan to buy more myself on Monday.
On Feb 05 02:16 PM Alex Filonov wrote:
> Palladium is used exclusively as an industry metal. There is no known
> investment or jewelry use. Most of industrial use is in auto catalyst
> converters. Most of companies use platinum, not palladium. So by
> buying palladium you depend on couple (maybe three) auto companies.
> Depending on auto industry is a very bad bet now, depending on small
> number of players is even worse.
...if PGM production stops, then it is bullish.
...if PGM production is up, then it is bullish.
...if PGM prices are down, then it is bullish.
...if PGM prices are up, then it is bullish.
...and PGMs are immune to long-term demand destruction.
Thanks, I feel better about all those paper losses.
Re: Alex Filonov "Palladium is used exclusively as an industry metal. There is no known investment or jewelry use."
My family's business makes platinum and palladium jewelry daily. But you and the other posters are correct - We could trade the gold, but people would not accept platinum or palladium for barter. PGMs are completely useless in that regard.
H.J. Huneycutt is also correct about shipping. Layoffs in the USA are rising, and demand destruction has barely begun to trickle up. Until factories start running at capacity, ships face a long-term decline in demand. Avoid any shipper whose cash from from continuing operations did not grow, with a quick ratio < 2, debt/equity >.75, and who has not yet cut the dividend - because they will.
If you are considering DRYS [bad idea], read my comments here:
seekingalpha.com/user/...
The nature of shipping industry is they are SLOW to respond to increased demand, but QUICK to respond to decreased demand. Read why here:
seekingalpha.com/artic...
Quote:
The unique nature of shipping supply and demand is that when demand is high, it's hard for supply to catch up, because you cannot build new ships fast enough, or make the ship sail fast enough to meet the demand. On the other hand, when the demand is weaker, the industry CAN respond promptly to reduce capacity to meet lower demand, by canceling new ship orders, speed up scrapping of old ships, lay up ships for longer period of maintenance, or simply sail slower to save fuel cost and make fewer port calls. All those adjustments are happening right now so in short term, dry bulk shipping is very bullish.
More over, when you consider global demand, have you forgotten that GOVERNMENT SPENDINGS, especially deficit spending, are big physical demand on goods and services just as well!
I hardly think that government earmarks - on bridges to nowhere, green bean museums in SC, bonuses to NYC bankers, and graffitti monuments in CA - can compensate for lower factory orders.
Chinese workers are migrating back from the city factories, indicating lower output from an export nation. China is supporting domestic demand and has boosted domestic agriculture.
USA consumer demand is still declining. Americans are using the stimulus money (stolen from their own grandchildren) to pay local grocery and gas bills. And USA consumerism is delicate, because China could decide that their growing middle class is a better investment than loaning money to the US Treasury.
"Feb 12 (Reuters) - Greek dry bulk carrier Star Bulk Carriers Corp (SBLK) said it was suspending its cash dividends..." supports my assertion that shippers will hunker down. DRYS has no dividend to cut, and its quick ratio is less than 1, so it has no easy savings.
E*Trade says DRYS "Q4 earnings are expected to be announced after market hours on February 11, 2009," but I see no announcement - another bad sign. It reminds me of CXTI. "January 22, 2009, Thursday Suspension of Dividend" is all their financial calendar lists.
Government spending in no way makes DRYS a safe investment: Factory orders and increasing commodity demand will make DRYS a good investment. And that assumes Economou does not do what he does best.
Good hunting.
How did they manage to get the very first few silver bars of so many different brands of silver bars? Those are RED FLAGS.
seekingalpha.com/artic...
Not very flattering. Nothing against you personally but I feel for the people who go long based on your conclusions when your motives are for your own profit.
I am not David White. But his opinion is nice to read. No one can get day to day movement timing correct. But the important thing to stick to is the long term fundamentals. The global shipping industry's long term fundamental is very bullish due to all the government spending and stimulus programs. Make sure you buy some shipping stocks at the cheap. I think EXM is still the best, but now EGLE also look very attractive.
"Avoid any shipper ...who has not yet cut the dividend - because they will." EXM, my 2nd favorite dry shipper, has cut the dividend.
DRYS was going to sell a 1995 Panamax vessel at a 50% loss, then got stiffed by Samsun Logix for a $1.5 million deposit, which means the sale is probably defunct.
Why do they need to sell anything at a 50% loss?
DRYS is selling distressed assets to people who cannot pay, has too many ships [fixed costs from overcapacity can kill.], has too little cash, is shockingly corrupt, and has switched into long-term charters at low rates. So, if government borrowing makes trade explode, they are out of the spot market anyway. And if government stimuli have no effect, then they are dead in the water from cash drain.
Wait for factory declines to bottom out, then buy back into shipping. With GNK, EXM, NM, and ESEA out there (I already sold DRYS, EXM, and ESEA), why would anybody risk anything on DRYS? Nitroglycerine is more stable.
Government stimulation programs WILL have a very positive effect on commodities and on shipping.
1.Remember governments print money out of thin air. But each dollar the government spend has exactly the SAME purchase power as the dollar Joe-six-pack holds. The spending WILL create a huge demand on physical goods and services.
2.Reckless deficit spending by the government floods the market with excessive fiat currency, debases the currency and causes depreciation of the currency. This FORCES people to dishoard their dollar holdings and BUY physical precious metal and other long lasting physical commodities to preserve value, whether they need it or not. This creates a huge demand on physical goods in excess of people's immediate needs. This is very bullish for commodities and shipping.
Buy some more SWC, the best precious metal player.
You keep mentioning the fundamentals from the supply side, without even a mention of the demand side, which is in destruction mode.
Of course, you will be right at some point in the future, but the question becomes when?
I do recognize there is a big commodities sell off of everything started at the end of July, 2008. I failed to predict that sell off. Most people failed to predict the commodities sell off as well as the associated US dollar rally. However I did make the correct call in recognizing the REAL NATURE of the sell off, and summarized it in this Oct. 16, 2008 article:
Are Safe Haven Investments Really Immune From Current Crisis
seekingalpha.com/artic...
I advice you to read that article. It answers all your questions. But in short answer. The simutaneous sell off of all commodities at eaxctly the SAME TIME, have very little to do with supply and demand. It was a forced liquidation of the supply chain, causing an illusion of over-supply and at the same time causing supply destruction. Once the supply chain is totally depleted of the inventory, then you will start to see tight supply again, and prices will go up.
PGM metals continued down for about a month after I made my call on Oct. 16, 08. Then they bottomed and have steadily pushed up ever since. The supply demand still leans on the bullish side. Now we have a further bullish factor as the supply chain inventory has been purged.
Please do read the Oct. 16, 08 article I cited above as it answers your questions in full. Ask me again after you have read it.
Palladium-platinum rush begins
www.commodityonline.co...
MUMBAI: As the developed world and developing countries are reeling under the worst recession period, bullion, platinum and palladium have become hot properties for investors....
> I just bought OCNF based on the beaten up industry and thier dividend
> of .77 cents. What's the story with this persons last comments on
> share dilution? Thanks, Mark
I am not sure about what share dilution you are talking about in OCNF. This is also affiliated with George Economou, just like DRYS. Having a DRYS is enough George for me, I do not need an OCNF. I do own some DRYS after it's beanten down recently. But I own more EXM and EGLE than DRYS, as I believe these two represents better valuation.
Make sure you also own some SWC shares. It's the best precious metal player I can find, I dedicate the biggest chunk of my portfolio to SWC.
Thanks for your hard work and info.
Since EGLE 's registry is in NEW YORK State, do you think
the sentiment of "BUY AMERICAN" for Stimulus would help EGLE ?
Or, is a State such OHIO would mean more to President Obama for his next term run ? As we know, OHIO is a must win for any President in recent history. AKS is headquartered in OHIO and employ lots of workers. Would you consider AKS an Obama stock ?
Thanks again.
All dry bulk shippers are global enterprises engaged in international trade. So I do not think whether the company is registered in New York or any where else makes a difference. The important thing to look at is the fleet the shipping company owns, current market capital relative to the fleet size, current time chartering status and balance sheet. All shippers are very good buy at this point. As for individual shippers you need to do your hard work to make your own judgement who is the best buy and who is too expensive.
I am watching AKS for a while now. I think now is not time to buy AKS yet. The demand from China needs to kick in first. Now is a good time to buy shippers because they are way over-sold, and the industry is quick to adjust to lower shipping demand to ensure reasonable profitability, so the shipping recovers must faster than the actual demand recovery.
Precious metals and shipping are two things most worth buying now.
Lack of new car sales also means lack of old cars being scrapped, as people struggle to keep their old cars longer. Read recent news, auto repair businesses are booming. Auto Zone stock price is near all time high. All these mean there are fewer scrap cars available, cutting the recycling.
Another factor is current low metal prices discourage recycling of scrap catalytic converters. Gasoline engine cars have catalytic converter which mainly cintains palladium, not platinum. Each old catalytic converter has about 2 grams of palladium left and ultimately could recover 1.5 grams of palladium, or 0.05 ounce, or worth only $10. The recycling process costs much more money than the $10 the metal is worth. Due to this reason, the recycling activity may come to a total halt, cutting off 1.1M worth of palladium supply per year.
This provide a very strong argument for investors to buy palladium at $200 per ounce. Such investor buying on the other hand adds to the demand and leads to further supply shortage which will drive up the palladium price when the fundamental force kicks in.
[Sarcasm on] What a shocking development! [Sarcasm off.]
But at least Mk.Ant's position was offset by the massive investments he made in PAL per yahoo finance.
(Oops - button was still on.)
DryShips announcement has zero surprise factor at all. It's a totally unwarranted freak out reaction. The fact of the matter is the worry of "going concern" is only theoretical. The banks will not accelerate the loans un-necessarily, just like your mortgage bank will not ask you to pay off your half million dollar loan on your house tomorrow within 24 hours. It is not in their best interest to force a foreclosure as you as you are making your payments.
Latest development from Norilsk makes palladium, and hence SWC and PAL an even better investment story. You must read this:
tinyurl.com/ddfdvy
What a shocking development!
Obama is backing Solar companies with federal dollars to create 5 million jobs in the next 5 years.