Gold shares outperform Platinum shares in S Africa

January 27, 2009

Commodity Online
JOHANNESBURG: Between platinum and gold which will win the race? If reports from South Africa, a major gold producing country, are any indication, the world will always back gold against platinum in the race.

An indication for this was evident in a recent analysis by experts when they said South African gold shares were poised to outdo platinum shares in the first half of 2009.

Analysts said they have found a clear leaning towards South African gold shares away from South African platinum shares. This means there would be more downside risk to platinum earnings than to gold earnings.

And, this seems to be the beginning of a much better performance for South African gold sector stocks.

Potential gold-earning increases would be driven not only by price but also by production, which made for a better investment case for gold.

Whereas, South African platinum stocks will reflect the decline of the platinum price basket well into 2009.

Many of the major platinum producers will post losses in 2009, bringing platinum’s multiyear bull-run to an end.

Although the average fourth-quarter gold price was down 9% from $871/oz to $796/oz, the weaker South African currency delivered a 17% rise in the rand price of gold from R216 000/kg to R253 000/kg.

The outlook was further enhanced by the usual strong production in the final quarter, when mine personnel pushed hard to secure bonuses before Christmas.

For the platinum miners, the second half of 2008 could, however, be split into a reasonable start and a disastrous end.

The average platinum-group metals’ basket price dropped 43% in the second half and a further 35% at the start of 2009.

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