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Are Platinum Miners in a Fix?

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Aug. 21 2015, Published 10:44 a.m. ET

Platinum miners

South Africa is the biggest platinum producer. Most platinum producers in the region have cut down their production by as much as 40%. Slumping prices and the high cost of mining have pressured producers, resulting in job cuts and layoffs. Platinum prices have plummeted 17.73% on a year-to-date basis.

Platinum miner Lonmin, the third-largest precious metal miner, is about to lay off as many as 6,000 employees. Glencore’s CEO, Ivan Glasenberg, has also cleared the air and suggested that Glencore isn’t a long-term holder of platinum mines.

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Platinum prices on Tuesday, August 18, settled at $999.4 per ounce. The gold–platinum spread surged 0.38% and ended at $1.1186. Over the last few trading days, platinum saw more up-days than down-days. Platinum futures on Comex had a marginal 0.32% loss on a 30-day trailing basis. The chart below helps you interpret last month’s platinum performance.

Technical analysis

Platinum prices are down 0.32% on a 30-day trailing basis. As prices move up and down during a trading day, the settling price still comes to the open price level, resulting in a standoff. This standoff creates a price level that changes insignificantly from the previous day’s close. Neither bulls nor bears could dominate the market, and equilibrium prices suggest a turning point may be just around the corner. The support level is close to $950 for platinum.

Miners go into the red

Platinum prices are following fellow precious metals like gold. Tuesday was a down-day for gold as well. However, the SPDR Gold Shares ETF traded almost flat and lost 0.02%. Very few miners gained on August 18. The gainers include Eldorado Gold (EGO) and Anglogold Ashanti (AU). Goldcorp (GG) marginally lost 0.4%. These stocks together contribute ~16% of the VanEck Vectors Gold Miners ETF (GDX). The iShares Gold Trust (IAG) marginally gained 0.09% on Tuesday.

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