Should South African Strikes be Resolved, Platinum Prices will Likely Suffer

The chart below reflects the fact that the recent rally in platinum prices, driven largely by South African mining work stoppages and strikes, has taken the metal up to falling resistance dating back to 2008.

At the same time commercial hedgers/users (some of which are likely the same entities weathering the work stoppages) have amassed their largest net short position in the metal on record.

The inverse is true of large speculators, who have amassed their largest net long position in the metal on record – by a very wide margin.

As we correctly noted with copper some time ago when we suggested a material net long position in that metal by commercial hedgers suggested a rally was likely, hedgers tend to get the call right and large speculators wrong, at major inflection points in metals.