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Palladium Panic-Bid To Record Highs As Shortage Fears Mount

Silver

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#1
https://www.zerohedge.com/news/2018-01-03/palladium-panic-bid-record-highs-shortage-fears-mount

by Tyler Durden
Wed, 01/03/2018 - 11:15
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Palladium was up 55% in 2017 - the best performing commodity in the world - and if the first two days of this year are anything to go by, 2018 will see a repeat.

Palladium inventories in warehouses tracked by Nymex shrank 25 percent in December, capping a fourth straight annual decline, the longest streak since 2000.






Amid shrinking inventories and still strong (credit-fueled) auto production (and sales), Bloomberg reports the metal used to curb pollution from gasoline-fueled engines climbed to a record on the New York Mercantile Exchange as the dollar weakened for a fifth straight day.







Palladium production will continue to lag behind consumption until at least 2022, Morgan Stanley analysts forecast in a report Dec. 11.

“People are worried about shortages,” Peter Thomas, a senior vice president at Zaner Group LLC in Chicago, said by telephone.

“The market took off on short supply, good demand and a weak dollar, and ran into some monstrous amounts of stops and popped and rallied.”

Good thing there is no inflation.
 

Silver Buck

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#2
A couple of nuggets to gnaw on concerning Palladium:

Norlisk Nickel is the top producer of Palladium in the world (accounting for 41% of the world's supply):

Source: https://www.thebalance.com/the-10-biggest-palladium-producers-2339734

"OK SB, so what! What's the big deal!"

The owners are throwing a shit fit.

"Co-owners of Russia's Nornickel back in fight for control"

Source: https://www.reuters.com/article/us-...ickel-back-in-fight-for-control-idUSKCN1G00LP

Excerpts:

"MOSCOW/LONDON (Reuters) - A power struggle over Norilsk Nickel (Nornickel) (GMKN.MM) resurfaced on Friday as billionaire Vladimir Potanin offered to buy Roman Abramovich’s stake in the mining group, and a third businessman - Oleg Deripaska - tried to block the deal."

How long has this been going on?

"Deripaska and Potanin, who is Nornickel’s largest shareholder, have periodically been at loggerheads since Deripaska’s aluminum group Rusal (0486.HK) bought a stake in Nornickel just before the 2008 global crash. Rusal currently owns 27.8 percent of Nornickel.

Chelsea soccer club owner Abramovich stepped up as a “white knight” minority shareholder, to act as a buffer between Potanin and Deripaska in 2012.

The peace deal involved a five-year lock-up period, during which they could not sell most of their Nornickel stakes. This ended in late 2017.
Deripaska and Potanin, who is Nornickel’s largest shareholder, have periodically been at loggerheads since Deripaska’s aluminum group Rusal (more on Rusal later) (0486.HK) bought a stake in Nornickel just before the 2008 global crash. Rusal currently owns 27.8 percent of Nornickel."

Things ramped up in 2012:

"Chelsea soccer club owner Abramovich stepped up as a “white knight” minority shareholder, to act as a buffer between Potanin and Deripaska in 2012.

The peace deal involved a five-year lock-up period, during which they could not sell most of their Nornickel stakes. This ended in late 2017."

So, while I do not believe that this is the sole reason for the rise in Palladium (the increasing use in superconductors may be a significant demand factor), it stands to reason that the market would be influenced by such ownership instability with the world's largest producer of Palladium (especially at 41% of the world's supply).

How much longer is this going to go on? Perhaps not much, considering:

"Potanin made an offer to purchase a stake in Nornickel from Abramovich and his partners, Potanin’s asset manager Interros Holding told Reuters on Friday.

...

Rusal is now seeking an injunction in a London court to block the possible deal, Interros said. Interros also said it believed Rusal’s claim against the possible deal was unjustified.

Stephen Phillips, the judge hearing the case in the London court, said on Friday he would allow parties involved to delay the injunction hearing until the week of March 5. The parties in the case also asked the court for a trial before June."

So, it seems that the pissing contest over who controls the world's biggest Palladium producer is about to come to some sort of end, very soonish. Then again, we are talking about courts, and lawyers, who make money keeping things in litigation.
 

oldgaranddad

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#3
I've seen Palladium run up before over the years. Most of the time it turns out to be some sort of manipulation or short squeeze only to free fall back to its supports.

My advice, wait for the carnage, jump in at the low, grab some, sell some on the dead cat bounce to take some profits then take the rest and stash it away for a future run up.
 

Silver Buck

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I've seen Palladium run up before over the years. Most of the time it turns out to be some sort of manipulation or short squeeze only to free fall back to its supports.
Ayep, it would free fall just before expiry (talk about a roller coaster ride!).

My advice, wait for the carnage, jump in at the low, grab some, sell some on the dead cat bounce to take some profits then take the rest and stash it away for a future run up.
I was holding on to most of it 'for near-life', but when you go from very low $400s to near mid $900s, it's time to take profits off of the table (including that Ballerina). Better to sell a bit too soon that try to sell a bit too late. I sure missed the boat on Silver by not wanting to fight the crowd on a Saturday.

...

It sure would have been worth the fight.,.
 

oldgaranddad

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#5
..I sure missed the boat on Silver by not wanting to fight the crowd on a Saturday.....
Don't feel bad. I was in the same boat... that same boat that eventually had that tragic accident and now is in the bottomless abyss at the bottom of that lake.