Platinum and palladium will be the best performing precious metals next year as record global car sales will keep them in short supply for a third year, according to the most-accurate forecasters.
The metals, used in catalytic converters, will be in a shortage for the longest stretch since 2005 for platinum and 2000 for palladium, Barclays Plc and Johnson Matthey Plc data show. Platinum will gain 13 percent to average $1,635 an ounce by the fourth quarter of 2014, according to the mean of eight estimates by the most-accurate analysts tracked by Bloomberg in the past two years. Palladium will gain 10 percent to average $823 an ounce, the most for a quarter since 2001.
While gold and silver have slumped 20 percent or more because of diminishing faith in them as a store of value, investors are bullish on platinum and palladium. Growth in car sales is projected to accelerate to 4.8 percent in 2014 from 2.7 percent this year, according to LMC Automotive Ltd., at a time when metal stockpiles are contracting as mining companies fail to keep pace with demand.
“Platinum and palladium markets show the tightest supply and demand among precious metals and probably will throughout next year as well,” said Daniel Briesemann, an analyst at Commerzbank AG in Frankfurt and the most-accurate palladium forecaster tracked by Bloomberg over the past two years. “Industrial demand should stay high.”
Palladium rose 6 percent to $746.10 in London this year as platinum fell 6.1 percent to $1,445.60. Gold dropped 20 percent and silver 25 percent. The Standard & Poor’s GSCI gauge of 24 commodities declined 3.4 percent and the MSCI All-Country World Index of equities advanced 17 percent. The Bloomberg U.S. Treasury Bond Index lost 1.8 percent.
Platinum will average $1,500 this quarter and palladium $750, according to the Bloomberg News survey. The most-accurate list includes the top five forecasters of precious metals, and the remaining three are made up of the best analysts for gold, silver, platinum and palladium individually that provide estimates for platinum-group metals.
Holdings in exchange-traded products backed by platinum reached a record 73.3 metric tons valued at $3.4 billion on Oct. 18, according to data compiled by Bloomberg. Investment in the funds rose 61 percent since the start of the year, compared with a 28 percent slump in gold held in similar products. The amount of metal bought through palladium ETPs increased 16 percent to 67.7 tons valued at $1.63 billion.
Industrial applications account for about 60 percent of platinum consumption and 91 percent for palladium, according to London-based Johnson Matthey, which makes about one in three of the world’s catalytic converters. That contrasts with about 10 percent for gold, data from the London-based World Gold Council show.
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