Hedge funds are siding with analysts predicting decade-high palladium prices even as investors cut holdings in exchange-traded products backed by this year’s worst-performing precious metal.
The first drop in platinum mine supply in four years and record car sales, the biggest source of demand, are reducing a surplus of the metal and shoring up prices on the brink of a bear market.
Investors are buying platinum at the fastest pace since 2010 after disruptions at South African mines caused the biggest loss of supply in at least seven years.
The Brink’s Co., which stores and transports bullion, is set to open one of the world’s largest precious metals vaults in the London area within the next month, at a time when investors’ gold holdings are at a record.
Carmakers will use a record $7 billion of platinum in catalytic converters next year, diminishing a glut just as mine production declines for the first time since 2008.
Silver, the best-performing and most-volatile precious metal of the past year, may rebound from a bear market as investors bet on growth in developing nations and an extended European debt crisis.
"The problems we've seen over the last year have not disappeared."
- Thorsten Proettel on Dec 27, 2012