October platinum had an extended down range day along with the S&P 500 but managed to close above key support at $1550. Until the economic outlook improves we think platinum will test its next support level at $1526 with some bargain hunting buying along the way. The bias is down but we don’t see platinum going into plunge mode just yet.

The S&P closed beneath its May flash crash low today. That is not good for industrial metals. Copper took back all of last week’s gains today with September futures down $.1590 to close at $2.9305.

Oct platinum $1,555.10, down $15.30; Range $1,537.00-$1,574.30

Sep palladium $454.40, down $18.05; Range $448.00-470.55

Intersting read from Jim Rogers:

“Silver is 70% below its all-time high, 60% or 70% below its all-time high. Gold is making all-time highs. I think people should perhaps look at silver, platinum, palladium. Palladium is also 50%-60% below its all-time high. Platinum is maybe 30% below its all-time high. Frequently, you're supposed to buy the things that haven't moved as much. And so I would be looking at the others if I were thinking about precious metals. But I own all four, don't get me wrong.

“If I were looking at precious metals I would be looking at the ones that haven't moved as much. If one doesn't own gold, and one doesn't want to buy the others for whatever reason, one should start waiting for some sort of correction and then buy some gold. But as I said, the others are much more depressed historically than is gold.”

The S&P 500 is heading once again for its May lows. We’ll see if platinum follows suit. The October contract closed today at $1,568.20 after touching a low of the day of $1,548.30. There was marked profit taking above $1600 in previous sessions. $1500 here we come.

Slackening auto catalyst demand and talk of a double dip recession in the U.S. economy should continue to weigh on prices.


Oct platinum $1,568.20, down $6.50; Range $1,548.30-$1,579.00
Sep palladium $470.00, down $4.35; Range $461.90-$479.00

July platinum settled at $1572.00 up $4.50 on the day but still below yesterday’s high of $1585.10

As traders we sometimes get itchy trigger fingers. We get tired of all this waiting around and want to do something. There are better short term trading opportunities than precious metals right now. The Nymex mini crude oil for example. Or go short the dollar index or long the Euro currency if you’re a real thrill seeker.

A technical case can be made for higher platinum prices. That’s a far cry from saying that the fundamentals are good. When we hear that demand has “improved” it means it went from bad to a little less bad. To me these are itchy trigger finger signals, nothing more. The downside risk in the metals far outweighs the potential for upside gains.

An interesting mix of opinions on gold was posted over at the Motley Fool. Contributor Morgan Housel expresses my feelings on precious metals in general more eloquently than I could, especially regarding the overconfidence of many enthusiasts.

Buying gold should make sense as the global economy rots. I just question whether the timing is right, given the massive run-up.

Frankly, the confidence of the gold bulls scares me. They don't think they're onto something; they know they're right, and naysayers are wrong, and stupid you for thinking otherwise. I'm not a mining expert, nor do I follow the gold industry or even particularly care about it. I just know that this behavior more often leads to disappointment than riches.

Here's why I'm wary:

• Retrospective back-patting: Gold has essentially gone vertical for 10 years, which bulls somehow find bullish. Really? All it means is you should have bought 10 years ago.
  
  There's also a sense that gold must go higher because it hasn't hit the record highs reached in the early '80s. Count me out. I don't think a level that in hindsight was clearly overvalued and set up a devastating collapse should be strived for.
• Celebrity endorsement: Forget Glenn Beck. There's a great commercial where G. Gordon Liddy (of Watergate fame, now apparently a respected gold analyst) says, "Gold is the time-tested currency that goes up, not down!" No further comment needed.
  
  Gold bulls are quick to point out that this is tabloid economics and doesn't matter. Like hell it doesn't. Name an asset that had celebrity endorsement and didn't collapse.
• The scarcity fallacy: Gold can't be a bubble, some say, because it's finite. But so is land, and look what happened. No asset is immune to overvaluation, and all assets can become disconnected from reality.

I don't know whether gold is a bubble. I just know that it's giving off the aroma of something that smells like one. Buying a little bit as a disaster hedge might make some sense. Buying a lot in an attempt to make money seems dangerous.

July platinum $1572.00 up $4.50 Range; $1563.60-$1579.50

September palladium $481.25 up $6.05 range; $468.30-$484.00

Summertime’s here. During my financial reading this weekend I found that professional investors are still on the sidelines waiting to see what everyone else is going to do. They don’t want to be equity buyers with so much uncertainty in the air. We live in interesting times.

Two of my friends bought some palladium in their precious metals pool accounts. They say they have their long term gold and silver holdings in place and they want exposure to other metals for diversification. If prices come down or they lose money on the trades they won’t be wiped out, they’ll live to fight another day. They are long term holders of precious metals as an insurance policy against financial catastrophe.

I like and respect those guys but they don’t have the trader mentality. For example it is hard for a trader to recommend buying gold now because it is too close to record high prices. Buying at a low price is essential even and especially when trying to catch large price adjustments that can take several years to play out. If platinum prices go down precipitously as I suspect there will eventually be the kind of buying opportunity that presets itself once every decade or so. If 2008 was just a rehearsal (a mighty big if) we have to take the position that if prices go flying right out of here to the upside we’ll miss the market and we can live with that. We’ll live to fight another day too.

Platinum closed today at $1563.40 up $28.40 on the day and looks ready to charge through resistance just below $1580. Naturally I’m skeptical of this rally just as I am skeptical of the American recovery. I don’t want to be. I want the economy to improve, for equities to rise and for the scent of optimism to waft in through the open windows. I would like nothing more than to do a short term trade in platinum at higher prices as it moves upward in synch with the stock market. But for a long term buy and hold the time is not yet nigh.

July platinum:  $1,563.40, up $28.40; Range $1,538.90-$1,567.70

September palladium:  $462.60, up $14.05; Range $451.25-$463.10

Meanwhile: U.S. Identifies Vast Mineral Riches in Afghanistan

The United States has discovered nearly $1 trillion in untapped mineral deposits in Afghanistan, far beyond any previously known reserves and enough to fundamentally alter the Afghan economy and perhaps the Afghan war itself, according to senior American government officials.

A cool PDF download about the platinum chalice made in 1788 when platinum was first being discovered and utilized. It weighs 55.45 troy ounces. There is also a small paten weighing 6.27 troy ounces.

The Platinum Chalice

July platinum closed at $1536.20 up $2.20 on the day. Platinum is beginning to show slight improvement due to better macroeconomic expectations coupled with a big up range day in the stock indices. We do not suggest that Platinum will soar through resistance at $1550 unless the equity markets continue to extend the initial gains. Short covering and a little fresh outright buying with continued Euro zone debt fears make us skeptical of any upward move in platinum prices.

July platinum $1,536.20, up $2.20; Range $1,521.10-$1,550.00

Sep palladium $449.30, down $5.95; Range $446.30-$456.55

Even with all the excitement surrounding gold and silver today the industrial metals stayed the bearish course throughout Monday’s session. Copper continued its slide to $2.7660 down $.0535 basis July futures. Platinum closed at $1517.30 down $8.00 but recovered from a session low of $1492.40 not following the stock indices to new post “flash crash” lows for their downward moves. We expect Pt to test its May low of $1446 in the coming sessions.

Ho hum except for the heat in the gold market. Stay sidelined and wait for platinum and palladium prices to come down before buying. Ride the copper beast down to weekly support at $2.4000.


July platinum $1,517.30, down $8; Range $1,492.40-$1,520.00
July copper $ 2.7660, down $.0535; Range $2.7200-$ 2.8095
Sept palladium $430.35, down 65 cents; Range $419.40-$431.70
August gold $1,240.80, up $23.10; Range $1,212.10-$1,243.30
July silver $18.162, up 86.3 cents; Range $17.195-18.295

Peter Schiff Disagrees

Peter Schiff says there probably won’t be another market collapse like 2008. He says the government will print enough money to keep home values afloat, to keep bond prices high and interest rates low, to make sure investors don’t lose money.

I don’t think the government will be ABLE to prevent a collapse. I sincerely hope he is right actually. Soft landing and all that. But I doubt it.

Platinum closed down $17.60 on the day to finish the week at $1525.30. The big story of the day was copper, which closed down $.1270 at $2.8195, beneath the critical February support low at $2.8500. That’s bearish, my friends. There is skittishness in the industrial sector based on weak recovery data. The weak recovery won’t go away. What is there on the horizon that looks encouraging? Nada. This is the economic desert we’re heading into. Please prove me wrong.

We would look to get short July copper next week on a technical bounce toward or slightly above the major support level of $2.8500.


This Memorial Day weekend I caught up on some of my financial reading. I’ve never seen so much bearishness. The consensus in the stock market is to look at any rallies as a selling opportunity. Have your finger on the sell button to get into cash and stay there. We are poised for a major downward move in the stock indices. Major meaning where she stops nobody knows. So they say.

Platinum has been thrown to the ground and is waiting to be kicked again. From the April high of $1760 to the May low of $1446 isn’t even a nameable chart pattern like a cascading waterfall. It was just a freefall plunge. I’ll call it a skydiver pattern. It looks eerily like 2008 when Pt skydove from $2250 to $800 in 10 months. Then from January of 2009 to April 2010 it ran up from $800 to $1760 with very few supportive corrections or consolidations along the way. That’s why if serious selling takes hold it could be bombs away until the $1036 to $1086 levels.

I hate to say it but we won’t be buyers until prices consolidate firmly or go significantly higher, say above $1720 or at least above $1660. Like they say buy on the way up and sell on the way down and right now Pt is on the way down.

Stay on the sidelines unless you’re brave enough to go short.

July platinum:  $1,525.30, down $17.60; Range $1,509.50-$1,553.90

September palladium:  $431, down $19.80; Range $426.50-$454

July copper:  2.8195, down $.1270; Range $ 2.8125-$ 2.9920

August gold:  $1,217.70, up $7.70; Range $1,198.10-$1,221.70

July silver: $17.299, down 63.2 cents; Range $17.285-$18.035

Since the huge $250 an ounce decline in mid May I don’t trust this market. I think further declines are ahead for platinum although prices could rise nominally from here. We are not short but are sitting on our hands waiting for a buying opportunity perhaps this fall.

Since the “flash crash” in the stock market last month there is a pronounced danger of institutional deleveraging in all commodities markets. It may not happen and we hope it doesn’t but the concern is very real. It is a fact of life that funds and institutional traders are the major players in commodities. If the selling bandwagon takes off there is no telling how much technical damage can be done. It could be 2008 all over again. For now all eyes are on the stock market as an indicator of major sentiment. Eyes only, from the sidelines.

Initial support comes at $1456.00. Next support level $1036.00. Be warned!

New York afternoon session for June 3, 2010

July platinum:  $1,542.90, down $7.50; Range $1,541.20-$1,568.10

September palladium: $450.80, down $2.50; Range $447-$464.95

July copper: $2.9375, down $0.940: Range $2.9255-$3.0845

August gold:  $1,210, down $12.60; Range $1,202.40-$1,226.50

July silver:  $17.931, down 38.4 cents; Range $17.825-$18.475

Welcome to the Platinum Trader

We trade not only platinum and precious metals but all commodities.