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Platinum Bounces Back after the Volkswagen Carnage

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Platinum rebounds

Platinum fell for five straight days due to the highly publicized Volkswagen scandal. However, platinum has been recovering from its falls in the last three trading sessions. Platinum rose 2.39% on Tuesday, October 6, and closed at $934.7 per ounce.

Palladium was the best-performing precious metal for the day, rising 2.68%. It settled at $707.1. Having entered the territory of $700, it has gained a whopping 9.73% on a five-day trailing basis. Below a chart that compares the performance of platinum and palladium.

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Sibanye expanding

The graph above shows that platinum and palladium have been trading in the opposite direction for last few weeks. However, they both have risen and moved in the same direction on Tuesday, with proportional gains. Platinum rebounded from the choppy prices due to the scandal. Still, it remains in negative territory, having fallen 5.1% on a 30-day trailing basis and a whopping 22% on a YTD (year-to-date) basis.

With bloodbath in platinum, mining companies may look forward to investing in platinum. On Tuesday, one of the biggest miners in South African, Sibanye Gold (SBGL), offered to buy Aquarius Platinum for $294 million. It is also looking to buy some of Anglo American Platinum’s aging mines. These purchases will take Sibanye’s platinum output from zero to about 700,000 ounces per year, or more than a million including related metals such as palladium. Sibanye rose 6.76% on Tuesday, and the stock has outperformed most of the precious metals mining companies on a five-day trailing basis, achieving ~30% of its share price.

Other mining companies that saw profits include Pan American Silver (PAAS), Cia de Minas Buenaventura (BVN), and AngloGold Ashanti (AU). SBGL, BVN, AU, and PAAS together account for ~12% of the VanEck Vectors Gold Miners ETF (GDX).

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