The Biggest Winner From a Rise in Precious Metals – by Adelaide Changole (Bloomberg News – June 19, 2019)

https://www.bloomberg.com/

The world’s best-performing precious-metals stock is up almost 90% this year, and there are signs the rally could run even further.

Impala Platinum Holdings Ltd. has outpaced 87 global peers with a market value of at least $1 billion in 2019, data compiled by Bloomberg show. The South African miner has benefited from surging palladium and rhodium prices, along with any weakness in the local currency, which bolsters its income from sales of dollar-based metals.

“The rally in palladium has been a big contributor,” coupled with a weaker rand, said Henre Herselman, a derivatives trader at Johannesburg-based Anchor Private Clients. Palladium, up 60% since August, makes a 30% contribution to Impala’s earnings, he said. The rand has dropped 5.4% against the dollar in 12 months.

“Impala’s profit margins were very thin compared to those of most other producers, so they were much more sensitive to the recovery in the platinum-group metals basket price,’’ said Izak van Niekerk, a money manager at Mergence Investment Managers in Cape Town. “Due to this sensitivity, the upward move in rhodium and palladium prices has benefited Impala’s share price more than higher-margin producers.”

Even after this year’s rally, at least one technical indicator suggests Impala Platinum may have further to climb. The stock’s 50-day moving average is about to break above the 200-day measure, a potentially bullish signal.

For the rest of this article: https://www.bloomberg.com/news/articles/2019-06-19/best-precious-metal-stock-rides-palladium-rally-for-90-gain

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