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Platinum jewelry demand continues to fall


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Hi! Everybody

I just read in the National Jeweler about platinum demand continues to fall, i would like to hear from you guys what you have to say about it. Here is the artical i read.


New York—Demand for platinum dropped in 2006 for the fourth consecutive year, according to Johnson Matthey's interim report, issued on Tuesday.Rising and volatile platinum jewelry prices will decrease global platinum jewelry demand by more than 10 percent this year to 1.74 million ounces. The price has caused manufacturers and retailers from all regions to cut back platinum inventories, while in China and Japan, recycling of old stock also continues to affect the amount of new metal purchased.But Johnson Matthey experts say they see no signs of sharp price decreases in the near future.


"Investment funds could support the platinum price at a $1,200 level, but if that interest were to decrease, we still see support from the jewelry sector and other industries supporting prices of more than $980," says Ellen Zadoff, market-research manager for Johnson Matthey.For the eighth year in a row, demand has exceeded supply, although the deficit this year totaled only 20,000 ounces.In related news, Johnson Matthey expects palladium demand to fall by 310,000 ounces to 1.12 million ounces for the year, and prices to trade in the $260 to $380 range.

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Wow this interesting. I would have thought that perhaps the fall in demand for platinum was down to the new palladium/gold mixes that have been hitting the market here recently, but if palladium demand is expected to fall then I am way off base. :) That said, white metals have been all the rage the last decade or so. Maybe the current trends are sweeping back to yellow.


I'd love to know what the other experts think.

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Context is everything. Johnson & Matthey is a mining company, not a jewelry company. Catalytic converters, primarily used as pollution control devices for cars, is the market that’s been driving the price of platinum recently. Converters are not very price sensitive at the consumer level since the reason people buy them is that they're required by law to do so and the metals speculators have been expecting the demand for them to explode as the ‘3rd world’, especially China, both consumes more cars and becomes more environmentally sensitive. So far this hasn’t happened to the extent predicted and the recent high prices are putting it off even further. Meanwhile, Americans are keeping their cars on the road longer, further reducing the demand for new converters, and consequently reduced purchases by the automobile manufacturers from Johnson & Matthey.


….or maybe it’s just bad research.



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Another thing affecting metal prices these days is that they are allowed to be included in investment funds now instead of being bought and sold as commodities.. The latest run up had little to nothing to do with demand for gold or silver and everything to do with investors taking large profits in new investment funds..


For example, the day that silver was allowed to be traded as a fund it jumped from about $9 to about $12 in a matter of hours..


I'm not seeing the new rules as a good thing..

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