Platinum and palladium exchange traded funds (ETFs) saw declines last week, but that may not be for long. Bargain hunters are coming out of the woodwork and others expect prices to spike when the World Cup interrupts South Africa’s power supply.
Lower palladium and platinum prices, assuaged fears about the European debt crisis and a more positive durable goods orders report has lured buyers back into the popular physically backed funds for the metals. [Platinum and Palladium ETFs: Boom or Bust?]
Another source of strength could be coming soon for the price of platinum, as well. Nicholas Larkin for Bloomberg BusinessWeek reports that platinum prices may “spike” next month as the World Cup in South Africa potentially disrupts power supplies to mines, according to ETF Securities.
The local utility company Eskom is confident they can handle the power surge, as the World Cup is during the South African Winter, meaning more electricity will be needed. Load shedding is likely to be enforced again for the mines in South Africa, possible creating another opportunity for a price hike. [Why Commodity ETFs Are Taking It On the Chin.]
Eskom is one of the world’s largest utilities, generating 95% of South Africa’s power and two-thirds of the power in the African continent. This means that as the world’s largest platinum producer, any power disruption in South Africa could have a huge impact on the market for the metals. [Platinum ETFs: Supply, Demand and the World Cup.]
For more stories about platinum, visit our platinum category.
Tisha Guerrero contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.