It’s Official: Platinum and Palladium Have Broken Out

In the last few weeks, we had “warned” several times how the price of platinum and palladium were at major resistance on their long term (daily) charts. In Precious Metals: A Pressure Cooker, just a week ago, we wrote “The charts show how platinum and palladium have moving towards a major resistance line and tested it three times. As a general rule of thumb, that is a condition for a trending move. Both metals are very close to retest the same resistance line. If (and that’s a big IF) they would be able to break out, it would be a very powerful sign of strength. The price levels to watch are $755 palladium and $1435 platinum.”

As of today there is no doubt anymore. Both metals have broken out strongly on big volume. All conditions are met for a long term break out. The up-to-date charts are presented without additional comment.

 

platinum_price_chart_5_march_2014

 

palladium_price_chart_5_march_2014

Interestingly, a couple of days ago, David Morgan from The Morgan Report told in a public interview how platinum and palladium look poised to go up significantly in the next several years, including this year. From the interview (source):

Palladium is poised to go much higer due to a combination of supply side issues. Worldwide production is around 7 million ounces and there are 3 million ounces available from recycling. China passed pollution controls recently; they need catalytic converters in all cars by the end in 2017. We should see an impact reflected in the price of palladium surely in the second half of 2014.

Air pollution in China is so bad that it has taken 6 years off the life expectancy of Chinese citizens.

We are already in a supply deficit [in palladium]. We entered it last year, and it is looking to increase in the foreseeable future. The price between platinum and palladium will narrow from here.

Newer technology has resulted in a change of the interchangeability between platinum and palladium; it is one for one now instead of two for one (platinum vs palladium).

We also refer to the article Palladium And Platinum Faced With Large Supply Shortage, released end of November 2013, in which Casey Research concluded:

This supply/demand imbalance will likely continue for at least several years, perhaps a decade. Prices haven’t moved all that much yet, but that doesn’t mean they won’t. Prices of commodities with a supply/demand imbalance can only stay subdued for so long before reality catches up. Either prices must rise or demand must fall.

The accompanying chart sums it up nicely:

 

It seems the window of opportunity is closing for platinum and particularly palladium investors.

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