Palladium is a screaming (paper) short (Jan 25th)

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swissaustrian

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source of the first chart: http://cotsignale.de/artikel/52-metall-update-20130126.pdf -> p. 5

The interesting part of the chart is the commercials (red) vs large speculators (green) positioning in paper markets. Speculators are massively long and commercials are massively short. :snidely: A massive correction is basicly a certainty. I'm opening a paper short tomorrow. Target $690 (50 dma) for starters.

The 50dma has massively diverged from the 200dma and the spot price has diverged massively from the 50dma. That's a classical indication that a correction is overdue.

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Palladium's long term seasonality is also turning bearish in February:

PALLADIU.GIF
 
Something else to chew on:
...
Supply concerns relating to difficulties in the South African mining sector, twinned with expectations of increasing demand from Chinese and American car manufacturers propelled palladium to its biggest quarterly rise in two years during Q4 of 2012. South Africa’s Business Report quotes Deutsche Bank’s Daniel Brenber, who expects to see a falling platinum/palladium price ratio in the coming years, and notes the potential for “a million-ounce [supply] deficit” this year “and in the following years.” Reuters quotes analyst expectations of an average-platinum price of $1,700/oz – up 10% from last year’s average – with palladium expected to average $745/oz, a gain of 16% on last year.

Of course, platinum and palladium prices – along with silver and the wider industrial commodities complex – are heavily dependent on inflation expectations. Increasing optimism and improving indicators from major economies will boost platinum and palladium, but it pays to consider alternate scenarios. ...
Click to expand...

http://www.goldmoney.com/gold-research/newsdesk/palladium-price-gains-forecast.html
 
While there may be a near time pull back, pallidum still looks like it will push higher after the pull back due to inventory shortages.

http://www.silverdoctors.com/russian-gold-reserves-up-8-5-in-2012-palladium-reserves-exhausted/

"Palladium reserves in Russia, the world’s largest producer of the metal, are “pretty much exhausted” and sales this year may be only 3 metric tons, according to Johnson Matthey Plc."


"Output in South Africa, the second-biggest producer, was disrupted by labor disputes and strikes, while lower grades contributed to a decline in Russia.

Palladium for immediate delivery has risen again today and is trading at $741/oz. Palladium, last quarter’s best-performing precious metal, has risen 5.4% this year after advancing 7.5% in 2012.

Palladium supply declined 12% in 2012 to 6.48 million ounces on the South African disruptions."
 
As your unofficial PMBUG residential chartist and trader- I concur. Cover once it almost taps the lower bollinger band. Buy once it almost taps the lower bollinger band. I think it will stay in this channel though, no lower then your trend line.

Cool! I love trading :popcorn:
 
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Yesterday's COMEX closing bang was pretty massive, exactly what one would expect given the extreme commercial short positioning in the futures market. At the opening of the overnight Globex session somebody pulled the trigger again. That's classic stop hunting. It always happens when commercials are trying to trigger waterfall declines.
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benjamen said:
While there may be a near time pull back, pallidum still looks like it will push higher after the pull back due to inventory shortages.

http://www.silverdoctors.com/russian-gold-reserves-up-8-5-in-2012-palladium-reserves-exhausted/

"Palladium reserves in Russia, the world’s largest producer of the metal, are “pretty much exhausted” and sales this year may be only 3 metric tons, according to Johnson Matthey Plc."


"Output in South Africa, the second-biggest producer, was disrupted by labor disputes and strikes, while lower grades contributed to a decline in Russia.

Palladium for immediate delivery has risen again today and is trading at $741/oz. Palladium, last quarter’s best-performing precious metal, has risen 5.4% this year after advancing 7.5% in 2012.

Palladium supply declined 12% in 2012 to 6.48 million ounces on the South African disruptions."
Click to expand...

The futures curve doesn't price in shortages at the moment, it's still solidly in contango.
The fact that commercials are so heavily short also indicates that there isn't a shortage.
 
Part of palladium's price movements are likely based on technological improvements in making palladium more usable in a variety of vehicle catalytic converters. "Last I heard", palladium could NOT be used in European diesel engine cars for example, it is platinum only. But because Pt is so much more expensive than Pd, there is a lot of active research into seeing if they can use Pd, one way or another, in more applications.

If hydrogen ever gets any traction as a fuel, for example, Pd's future is assured (it can hold 900 x its volume of hydrogen AND is impermeable to all gases except hydrogen).

One thing I have learned over the past couple of years is that we are NOWHERE CLOSE to having properties of the metals all figured out... Look at the rare-earth metals, it seems we learn something new each month about possible new applications... Same with graphite. Same with other materials.

If I had not been so lazy and ignorant when I was younger, I might have studied Material Science. Then I would have been getting all these phone calls asking me to place some money with them...
 
Palladium during the last few days shows that it's a purely industrial metal. Good economic news, it goes higher. Bad news, it goes lower. Gold and silver have traded the other way round.
 
Shocked about the crash in gold in silver? Watch what happened to palladium (and platinum) today:

I admit I was early to the short, but I think this is just the start in the platinum group as paper postioning is even more bearish than it was than when I went short.

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