Precious metals market suffers as stock market crashes
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By Heather Matthews – Exclusive to Palladium Investing News
Precious metals were worst-hit as the market crashed
Current market climate
The stock market events of September 15 have had an impact on all the commodities markets, including precious metals such as palladium and platinum. Investors are unloading commodities at a rapid pace, in an attempt to seek safer investments.
The fall of Lehman Brothers World Investment Bank, and the financial woes of such former heavyweights as AIG have created an atmosphere of caution and prudence with regard to precious metals’ investments worldwide.
The current stock market crash is regarded as devastating, bringing forth comparisons with the Great Depression. Famed economist Alan Greenspan has this to say about the bursting of the housing bubble and its effect on the world economy. “There has been a bit of historical revisionism going on. The real force behind the soaring real estate prices was a global one: a drop in worldwide inflation and interest rates, in part because the end of the Cold War and the rise of China as a manufacturing colossus.
“The housing boom is not an American phenomenon – it is a worldwide phenomenon,” Greenspan continued. “The evidence is quite overwhelming, indicating that what we are going through is a consequence of the fall of the Soviet Union and the shift of a billion workers from central planning into the labor market.”
The precious metals market has been experiencing difficulties during 2008, as a result of poor auto sales (platinum and palladium are used in the manufacture of catalytic converters), and the energy crisis. Although China has created a new market for palladium, stepping up its use of the metal in jewellery designs, spot prices are bottoming out.
“Overall, the fundamentals are just awful, from the equity markets to oil and precious metals, the bottom does not seem anywhere in sight,” commented Ralph Preston, of Heritage West Futures Inc. (San Diego, CA). “We are going to need a further decline in the dollar before we could start to see some buying in precious metals.”
Platinum prices have dropped almost 3 per cent, with palladium suffering more than 5 per cent losses on September 15: fears about diminishing economic growth continue to plague the world commodities market. Platinum and palladium spot prices are always influenced by general downturns in industry, as they are frequently used for industrial purposes, rather than simply as precious metals.
Palladium spot prices for September 15, 2008 (XPD) hit a low of US$228.00/238.00 per oz. plummeting US$14 dollars per ounce.
At the Tokyo Commodity Exchange, palladium fell, along with platinum: there was a 9.3 per cent drop in palladium spot prices, to 770 yen per gram. Prices for these commodities seem to be dropping in league with oil prices and equity investments worldwide.
Palladium company news
North American Palladium (TSX: PDL) – On September 15, North American Palladium announced the appointment of a new CEO, William Biggar. The current CEO James Excell is leaving on October 01, 2008. During Excell’s tenure, North American Palladium had consolidated investments in the Lac-Des-Iles and Shebandowan West Projects. Current stock quotes for North American Palladium are as follows: US$2.90 per share, up 1.75 per cent over yesterday’s close on the TSX.
Stillwater (NYSE: SWC) – This company develops the J-M Reef mines in Montana. They mine precious metals, and also recycle platinum and palladium from automotive parts. Their stock is currently up .20 cents per share for an ask/bid price of US$6.34 (NYSE) September 16, 2008. Back in March, Stillwater’s stock rose and fell as precious metal values fluctuated on the open market. However, Russian investment in Stillwater and an emerging market for jewelry using palladium in China is reviving the stock despite the current market climate.
Gold and silver were up as much as 2 per cent in early trading today. For details, see the commentary on Silver Investing News.
Tags: alan greenspan, american phenomenon, commodities, dollar, financial woes, futures, gold, great depression, historical revisionism, inflation, investors, jewelry designs, lehman brothers, market climate, metals, palladium, platinum, precious metals market, stock market crash, trading, world economy, world investment, worldwide phenomenon
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September 17th, 2008 at 10:16 am
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