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Short squeeze behind Pt gains Posted: Tue, 21 Nov 2006 [miningmx.com] -- THE increase in the price of platinum, to a record high of more than $1,400/oz, was owing to speculators covering short positions, said analysts in South Africa and the UK. “People are short of the market and are having to buy back to cover their positions,” said Jessica Cross, MD of Britain’s Virtual Metals. She was speaking on Classic Business, a radio programme aired in South Africa. There is also speculation that a platinum-backed exchange traded fund (ETF) was being planned. But Cross said this was unlikely: “I don’t think a market as tight as platinum could weather an ETF,” she said. The platinum price touched $1,402.50/oz in London before falling back to $1,390/oz. The previous record of $1,340/oz was set in May. “To put it in perspective, the gold market is 17 times larger than the platinum market,” said Richard Simpson of RMB Asset Management in Johannesburg. “It’s really not in the interests of the jewellers and the automotive market to compete for physical metal against an ETF.” Simpson was speaking on The World at Six, a business programme aired on South African broadcaster, 702. "We see the development of an ETF as a problem that can’t be ignored," said John Meyer, an analyst for Numis Securities in a note. "It could drive up prices significantly in the short and medium term, however, by encouraging demand substitution a longer term reduction in demand could cause a fall back in longer term prices," he said. Cross said that exports of platinum from Switzerland were the highest since records of sales from the country were being monitored by Virtual Metals. “Whoever wanted this metal, it’s not from the amazing recovery of the automotive market in the US,” said Cross.Free news alerts: click here to subscribe
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