Platinum & Silver Gain Attention At PDAC 2016By Neils Christensen of Kitco News
Friday March 11, 2016 10:16
(Kitco News) - Although gold was the shining star during the Prospectors and Developers Association of Canada conference in Toronto, Canada, other precious metals were gaining some attention with price ratios well outside historical norms.
Gold prices have made significant gains, rising almost 20% since the start of the year; however, other precious metals, platinum and silver in particular, have lagged behind. The gold/silver ratio is currently above 81, at the start of the week it was around 83. At the same time, the gold/platinum ratio is at around 1.30.
Mickey Fulp, creator of the newsletter the Mercenary Geologist, said that he hasn't seen the gold/silver ratio this high since the 2008 financial crisis. He noted that as far as 1971, there has been only one other time that the gold/platinum ratio has been at its current level.
"If you ask me what I am going to buy, I am going to tell you silver and platinum," he said. "Just by looking at the ratio they have the most potential."
Fulp added that if he had to choose between silver and platinum, his bet is on platinum.
John Sagman, interim CEO of Wellgreen Platinum, agreed that despite the low price, there appears to be renewed interest in the platinum group metals (PGMs). He added that they saw a decent amount of interest at the company booth during PDAC.
"Right now, the market is seeing some short-term fluctuation and developing a project with a potential mine life of more than 25 years we are able to look past these short-term fluctuations," said Sagman.
Wellgreen is currently developing and exploring its Yukon property, which has the potential to be the biggest platinum and palladium deposit outside of South Africa.
Sagam said that one of the reasons platinum and PGMs are suffering is because of high levels of stockpiles. He explained that producers stockpiled massive amounts of platinum and palladium ahead of the 2014 South African mine strike, which lasted five months. Since the end of the strike, producers have been unloading their stockpile.
"Right now, the supply and demand picture is about breakeven but we expect demand to outweigh supply in the years to come," said Sagam. "From our perspective, PGMs is a good market to be in right now."
Sagam explained that auto sales, which are expected to reach record highs in U.S. and China, should continue to support platinum and palladium prices. Higher global emission standards will also increase demand for PGM metals as they are key components in catalytic converters in diesel and gas engines, he said.
In November, Wellgreen managed to raise $11.4 million in capital, which has helped the company's 2016 exploration plan, which started earlier this year.