Extremely helpful analysis. Thank you. Comments on platinum would also be welcome given its precious/industrial metal duality.

David Fuller's view

Many thanks for your kind words.

An old adage I have previously used is that supply is usually the key variable with commodities.  This is particularly true for soft commodities but it also applies to industrial resources and precious metals.  South Africa is the biggest producer of platinum by far and it is presumably benefitting from new technologies.  These are boosting production and lowering costs.

In addition to South Africa, the main producers of platinum in descending order are Russia, Zimbabwe and Canada.  Shocked by falling producer prices, which have weakened their economies, they will need to sell all they can produce. 

All precious metals have industrial uses but these are susceptible to advancing technologies, which reduce the amount used or even replace it altogether.   This is a probable factor in platinum’s rare and current discount to the price of gold. 

Interestingly, platinum is currently leading the slide in precious metals and this is beginning to look climactic, as you can see on this 10-year weekly chart and for comparison, here is gold over the same period.  You can see that platinum had a much bigger bull market but is now approaching its 2008 lows.  It has surely seen most of its decline but we do not know when or at what price it will bottom, or what kind of base formation will follow.