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How will the new president affect palladium prices?

By Leia Michele Toovey- Exclusive to Palladium investing news

Palladium finally got some upside last Wednesday, when it rose 5 per cent on the sentiment that the recent price slip in the metal was overdone.

Prices for palladium have fallen 56 per cent in the third quarter, dropping 34 per cent last month alone. Palladium futures for December delivery cost US$184 an ounce in New York on Tuesday. But traders say demand prospects for palladium are favourable compared its sister metal platinum ^[2].

Palladium prices are based on U.S. currency, so Tuesday night's election ^[3] result will impact palladium's post election price.  A win by Democrat Barack Obama over his Republican opponent John would be marginally better for the dollar, but only because the Democrats already control Congress. This would make it easier for a new administration to push through activist policies to boost markets.  A spiking US dollar could scare off potential international holders, but how commodities respond to the new president involves various factors, and the outcome will be revealed over the coming months.

Palladium is under pressure from falling demand for auto catalysts due to a slowing U.S. economy and poor car sales. U.S. auto sales plunged 32 per cent in October to lows unseen in a quarter-century. General Motors ^[4] led the automaker's losses, dropping 45 per cent in a collapse that hit every major automaker and offered little sign that the industry has hit bottom in its largest market.

Company news

North American Palladium (TSX: PDL) will release its third quarter 2008 financial results on Monday November 10, 2008 following the market closure. A conference call to discuss the results will be held on Tuesday November 11, 2008 at 2:00 p.m. ET, presided by William Biggar, President and Chief Executive Officer. North American Palladium is a Canadian mining company that produces palladium, platinum, nickel, copper and gold from its 100 per cent owned Lac des Iles Mine located in Thunder Bay, Ontario. The mine was placed on temporary care and maintenance in October 2008 due to low commodity prices. In 2007, the mine produced approximately 4 per cent of the world's total palladium production.

Norilsk Nickel ^[5] is open to offers to purchase its only North American asset.  Chief Financial Officer Oleg Lobanov, speaking at a conference of finance executives, said Norilsk would consider offers for its stake of 55.4 per cent in Stillwater Mining Company, the only platinum and palladium producer in the United States. It bought the holding for US$257 million in 2003. The Montana-based company on Tuesday had a market capitalization of US$415 million on the New York Stock Exchange, valuing Norilsk's stake at $230 million. At the same time, Norilsk, the world's largest nickel and palladium producer is revising its investment program for next year because of pressure from the economic crisis. The revised investment program for 2009 will be completed by mid-December. "We are prepared for a hard year," he said, adding that Norilsk was for now not planning to reduce production but was considering an "optimization" of salary levels. "In a crisis situation, cash is king," Lobanov said. "We have to prioritize our projects," he said, adding that Russian projects took precedent over foreign ones because of differences in production costs. Stillwater mining has been a marginally profitable asset due to its environmental sensitivity and cost of labour. So far, Xstrata and Empala Palladium are potential suitors for Norilsk's stake.

USA Premium Exploration Inc. and Beartooth Platinum Corp (BTP:TSX*V) are pleased to announce the completion of the 2008 Drill Program at the Platinum Group Metals (PGM) Chrome Mountain and Iron Mountain adjacent properties in the Stillwater Complex, Montana, USA.  The 2008 Drill Program consisted of 12 NQ core holes totaling 1,623 m (5,324 ft), with 9 holes totaling 1,106 m (3,629 ft) on Premium's Chrome Mountain property and three holes totaling 517 m(1,695 ft) on Beartooth's adjacent Iron Mountain property. The 2008 drill program tested 5 km of the district scale 15 km PGM soil anomaly that hosts grades up to 1.2 g/t at surface. All 2007 drill holes were located in the broadest portion of the 15 km PGM soil anomaly; all 10 core holes began and terminated in mineralization. Three drill holes intersected a zone of Chromite,  which proves that the mineralization found at the Chrome Mountain property is similar to that of Platreef. This similarity was earlier postulated by PGM Consultant, Dr Reid Keays. This zone was not tested during the 2007 Drill Program due to inclement weather. Platreef is one of the most profitable styles of mineralization as it is located near surface, which lends itself to simple surface mining procedures and typically has large tonnages, and consequently the mining methods benefit from economics of scale.