Matt Badiali recaps the rise and fall of metals in recent history, giving foresight into the future prospect of metals.
The mining industry survived a brutal 6 years of metal prices plummeting, with the exception of some metals whose prices rebounded in 2017. In order for the prices of any commodity to rise it needs to apply the formula in which the demand exceeds supply.
In certain instances, such as the case of zinc, a lack of investment caused the supply range to fall below demand. Copper, is another example, whose price went up 27% since early 2016. Logically, this will be another metal whose supply will struggle to meet demand.
Deducing from his astute observation, Matt relays that 2018 will see the rise of another metal’s price. This metal happens to be platinum. The price chart of platinum features data compiled over the period 6 years, from 2011 to 2017.
In 2018, it wouldn’t surprise me to see platinum prices rise 25%. Here’s why…#Platinum #copper #Zinc #miningindustry #PreciousMetals #investing #commodities #markets #banyanhill $PLAThttps://t.co/ExzrvFilKF pic.twitter.com/2DzfDzmXuR
— Matt Badiali (@Matt_B_Guru) December 22, 2017
The chart demonstrates a steady decline from 2011 to 2016. The price dropped by more than 50% in 2016. This was followed by a brief rebound in 2017. Then the price fell to its lowest of 2017.
So, why, according to Matt Badiali, would this trend for platinum change in 2018? He cites a simple answer to this question: supply cannot keep up with demand. The World Platinum Investment Council reports that the year 2017 will end leaving a deficit of around 15,000 ounces. The council also expects the supply and demand gap to widen. The demand for platinum in 2018 will rise by 2%, while the supply will fall by 1% amounting to a deficit of 250,000 ounces.
This kind of a deficit was enough to put off platinum sellers in the past. A lack of significant increase in price left no incentive for sellers. This ultimately brought down supply. This is one reason why Badiali expects platinum price to rise in 2018. The other reason is sentiment. As aforementioned, the reason why copper prices shot up in 2017 was because electrical vehicles were perceived to raise copper demand. Essentially, the price of copper rose because of perceived demand.
While platinum’s demand fell because of the Volkswagen scandal. Since platinum’s main commercial use is in diesel catalytic converters, its value went down when the company admitted to false diesel efficiency. The fall of Volkswagen’s perception directly affected the price of platinum. Investors withdrew from investing in it because of perceived decline in platinum in the coming days.
However, platinum is still rare compared to other metals and since, most of the existing mines are running out — this will spur demand. In addition, Europeans prefer diesel cars, which will further raise demand, altogether changing platinum’s fortune in 2018. Based off this analysis, we can expect the price to rise up to 25%.
Matt Badiali is known as an investment strategist in metals, energy, and natural resources. He has experience in exploring and interacting with many CEOs in different countries. He also writes for a newsletter, Banyan Hill Publishing, about resource investing and much more. His speculative interest in science, finance markets, and companies enables him to gain knowledge and understanding at depth.
To know more, Visit:https://mattbadialiguru.com/