Both platinum and palladium are lower today as Japanese car production has been dramatically reduced due to a lack of electricity and numerous supply disruptions. The Palladium ETF - PALL is trading off 1.34% while the Platinum ETF - PPLT is down 1.43% both noticeable but not nearly as dramatic as the Uranium stocks and ETF.
Palladium was the #1 performing metal in 2010 just ahead of silver so the palladium etf had a spectacular first year of trading and has become a very active contract for such a small market. In fact, it accumulated nearly $1 billion in assets in the first 12 months making it one of the most successful ETF launches of the year. PPLT (the platinum etf) also attracted $815 million in assets but the price action has been much more subdued. In fact, platinum which had a price shock earlier in the decade has been losing ground to the other precious metals consistently for the past year.
There is little doubt that this dip in automobile production is a temporary event and that worldwide production will likely still meet it's goals. But after the big run palladium has had over the past year the market was due for a breather and this event appears to be enough of a catalyst, at least in the short run.
Monday, March 14
Uranium ETF Dives 20% On Japanese Reactor Worries
One of the first things that sprung into my mind on Friday as we saw the huge tsunami waves wreaking havoc in Japan was their nuclear power plants. Japan has a very limited supply of natural resources for generating electricity so they began to rely upon nuclear as their economy developed. In fact, with 53 active reactors Japan was 3 behind the U.S. and France in the number of active nuclear power plants.
This morning as news spread of yet another reactor issue and video of women and children being screened for radiation poisoning the shares of Uranium production companies such as Cameco plunged. In fact the Uranium ETF - URA which is comprised of 23 companies involved in the production of uranium dropped over 20% at one point which is very dramatic for a single session.
It remains to be seen how long the effect will last but there is little doubt that this incident will once again cast a shadow of doubt over the entire industry. The thought of radiation poisoning (a silent and deadly killer) is far worse than putting up with a little pollution which is why Coal is one of the few things that is up today. It also appears that the Natural Gas ETFs are perking up as well as the low prices and abundant supplies are very attractive in light of current events. There is little doubt that natural gas will play a bigger role in our energy future however the severe price spikes in the past decade still has energy producers leaning toward coal.
This morning as news spread of yet another reactor issue and video of women and children being screened for radiation poisoning the shares of Uranium production companies such as Cameco plunged. In fact the Uranium ETF - URA which is comprised of 23 companies involved in the production of uranium dropped over 20% at one point which is very dramatic for a single session.
It remains to be seen how long the effect will last but there is little doubt that this incident will once again cast a shadow of doubt over the entire industry. The thought of radiation poisoning (a silent and deadly killer) is far worse than putting up with a little pollution which is why Coal is one of the few things that is up today. It also appears that the Natural Gas ETFs are perking up as well as the low prices and abundant supplies are very attractive in light of current events. There is little doubt that natural gas will play a bigger role in our energy future however the severe price spikes in the past decade still has energy producers leaning toward coal.
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