Automotive numbers came out today, though dissappointing for the United States, they were strong out of China.
Reminder: Palladium is both a precious and industrial metal, primarily used as an auto catalyst in catalytic converters. It is required for economical vehicles to burn gas cleanly.
As GM’s numbers fell by more than 25%, worst in 28 years during the August summer month for the automotive giant, China grew by over 55% year over year, with an increase of roughly 200,000 units month to month. There was also a 32% increase in demand for energy saving vehicles during the same time.
Spurring this surge, we feel,(as mentioned before) is China’s growing middle class, and the loosening controls of the yuan back in June. This revaluation of the chinese yaun made their currency stronger globally, which makes it cheaper for the population to buy imported products.
With all this being said, and after a brief conversation with some of our metal experts, Palladium profits were taken today. The news caused the metal to shoot up to as high as $525/oz. during early morning hours.
With so many saying that palladium will fly to highs of $750 to $800 oz by years end, one has to ask themselves why profits are being taken.
We not only asked ourselves, but metal traders that are involved on a daily basis. One comment we got repeatedly during these Q&A sessions was that a pull back should happen in order for the price rise to be healthy. Others mentioned a one day spike is always followed by a downward correction. They compared it to an iphone release… fresh information caused more individuals than usual to take action on the metal. New news comes out the next day, and their attention shifts away causing the correction.
One trader, who asked to remain annonymous, made the statement;
“These are temporary profits that should be taken. It’s a Spike! Buy back in when it corrects in the following 48 hours. The Palladium tree is growing, at a faster rate than expected. The global mining issues, and new discoveries on palladiums capabilites are watering this tree with super nutrients! Whens the last time you saw a tree grow straight to the sky?”
Feel free to leave your opinions on the subject and whether or not you took profits on palladium today.