Palladium: "Violent, Stunning, Historic Collapse" - Gartman
Thursday January 26, 2017 11:01
(Kitco News) - Wednesday saw the worst trading day for palladium in a decade and well-known market watcher Dennis Gartman was quick to sum it up as a “violent, stunning, egregious, amazing historic collapse,” in his latest newsletter.
March palladium futures settled Wednesday’s session at $736.10 an ounce, down $59.75, or 7.5%. The metal has continued to see more selling pressure; as of Thursday morning palladium was last down almost 0.63% on the day, trading at $731.41 an ounce. The downward blow came after what has been a stellar start for the precious metal;
The previous day palladium its best price since mid-2015 and was up almost 18% since the start of the year. During Tuesday’s session, palladium hit high of $798 an ounce, up more than $118 an ounce since the start of January.
“We have no “fundamental” reason for the sell-off. Neither, however, did we have a reason for the palladium market’s previous rise into the trading stratosphere,” he noted in his Thursday edition of the Gartman Letter.
He added, “[W]e have been concerned that demand for palladium would be diminished in the years ahead as driverless cars and Millennials antipathy toward auto ownership would curtail automobile sales from their current lofty levels and it is automobile manufacturing that has spurred what demand there has been for palladium.”
While palladium’s rise and fall made little sense to Gartman, most analysts surveyed by Kitco News were not surprised by the move, noting that it is a relatively thin market and exaggerated moves can be expected.
Palladium and its sister metal platinum, were seeing strong price strength on the back of declining output from top producer South Africa, which together with Russia is responsible for more than 80% of global supply of the metals.