SeeTheLight

Safe Haven Investments: Imminent Danger and Opportunities

Mark has been prognosticating a V-shaped recovery for precious metals (except gold) for a long time.

A slightly less wordy summary of his opinion is that "supply" will over contract (in the shape of mines discontinuing operations) in response to reduced demand, thus creating a fast recovery for palladium and other metal prices.

But his logic is simply flawed. If metal prices did skyrocket against falling demand what would happen? Well the companies (automakers) are already losing money hand over fist since consumers are severely cutting back on automotive purchases, do you think that if they have to add in the additional costs of palladium will not either result in greater losses or higher prices for already unwanted cars?

The demand destruction is the real story, the supply is contracting in response, even if it over corrects it is not going to shoot up. Sure some companies may win out, but the metal will be mined to meet the reduced demand appropriately, whether by Norilsk or its replacement. A supply driven bubble is not realistic to anyone who doesn't have rose coloured glasses.

Personally, I think PAL and SWC will go up long term, but no where near what Mark prognostications imply. There are better recovery plays than these stocks.