Global Precious MMI: Precious Metals Index Rebounds On Back Of Palladium
London (Oct 10) MetalMiner's precious metals index, tracking a basket of platinum, palladium, gold and silver prices in several geographies across the globe, bounced back in October after several months of declines.
The Global Precious Monthly Metals Index (MMI) registered a value of 83 for its October 2018 reading, up 2.5% from 81 last month, stanching the bleeding - last month's level had not been seen since January 2017.
The U.S. platinum bar price had its own bounceback after having dropped last month. Platinum rose to $814 per ounce, up from $777 per ounce in September. However, U.S. palladium bar built up a two-month upward price trend by breaking the $1,000 per ounce level for the first time in eight months, rising to $1,070 per ounce.
This extends palladium's historic premium to platinum for yet another month.
Palladium Bubble?
John Dizard, writing in the Financial Times, contends that platinum's once-cheaper cousin is ripe for the bubble it seems to be creating.
"The best investment bubble propositions incorporate the familiar and the incomprehensible," he writes.
The largest single application for palladium, as MetalMiner readers well know by now, is to help convert toxic gases within catalytic converters. "Therefore, we have something familiar to investors (cars) and something incomprehensible (the physical chemistry of catalytic converters) - perfect conditions for a bubble," Dizard concludes.
Much of the bubble conditions can be explained by "Dieselgate" - read about it in the full article (paywall) - but speaking of palladium bar prices, as we were just a bit ago, those aren't what auto buyers should really be tracking: sponge is where it's at.
"Could it be that the automakers will run into a supply squeeze and be forced to buy palladium bars of the sort represented by Nymex futures? Not exactly," Dizard writes. "The automakers actually buy a semi-manufactured product called 'sponge', which is palladium (or platinum) particles used to coat a ceramic matrix inside the emissions system. There is a separate, over-the-counter market for palladium sponge."
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