The South African Market Today
Commodities keep on accelerating and making new highs as the vaccine roll out continues around the world. The continued demand for Platinum group metals is astounding as new highs are made in Palladium and Platinum. The palladium price broke a weekly resistance at $2788.44 and has broken out above $3000 and is set to set new highs. The renewed demand for the metal is the rise in auto manufacturing and the crack down in CO2 emissions in the EU and China. This fundamental drive for auto catalytic uses of the metal will see prices. The supply shortage is also exacerbated by the supply short fall caused by Nornickel closure of supply generating plants which has caused the metal to jump about 21% since March.
Stocks in Focus
SSW:SJ
On our local market you have a plethora of choices in trying to access palladium and platinum in your investment mix. The top three in the industry locally will be my focus when trying to access these commodities as the operational efficiencies that come with scale yield better earnings. You can choose between Anglo American Platinum, Impala platinum or Sibanye Still water. All have great operations, but my particular interest will be on Sibanye Still Water. In the commodities space I am not a liker of a single commodities producer because of the inherent risk of being a price taker so many market risk factors affect the company, and the revenue and earnings profile becomes cyclical. With Sibanye Still Water you also get access to the gold assets. Neil Froneman once mentioned earlier in the year that gold companies in South Africa need to merge in order to remain competitive so there needs to be a sector consolidation in the future. Gold as a metal has properties of a hedge against inflation and the level of debt households and governments is bound to produce inflation in later periods and the gold price will react to the positive side.
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