Quick Take: Platinum Shines as Strikes Limit Supply
NEW YORK (TheStreet) -- With labor disputes and strikes flaring up in South Africa, Will Rhind, head of U.S. Operations at ETF Securities, discussed the situation with TheStreet's Gregg Greenberg.
The recent labor disputes are nothing new, according to Rhind. It is part of a long-term problem that has always been in the industry and there's not really a simple solution.
The resolution also won't be overnight, he continued. These disputes tend to play out over weeks or possibly even months, potentially causing a large imbalance of supply and demand because South Africa is the largest producer of platinum and second largest producer of palladium.
The driving force behind the price increase is twofold, he explained: The long-term fundamentals are very strong and the current demand outnumbers the actual supply.
"Good fundamentals arguably -- all things being equal -- lead to higher prices," Rhind said. However, he did point to one thing that might be holding prices back from making a larger run to the upside: currency headwinds. Since so much of the metals are mined in South Africa, they are initially priced in the local currency, the South African rand.
With the recent strength of the U.S. dollar, the rand has been underperforming, which has had a slightly negative effect on the price of platinum and palladium, he said.
-- Written by Bret Kenwell in Petoskey, Mich.
Bret Kenwell currently writes, blogs and also contributes to Robert Weinstein's Weekly Options Newsletter. Focuses on short-to-intermediate-term trading opportunities that can be exposed via options. He prefers to use debit trades on momentum setups and credit trades on support/resistance setups. He also focuses on building long-term wealth by searching for consistent, quality dividend paying companies and long-term growth companies. He considers himself the surfer, not the wave, in relation to the market and himself. He has no allegiance to either the bull side or the bear side.