Gekko

I’VE been bullish on palladium and the platinum/gold spread since January, and for those of you who feel comfortable dealing in the futures or options markets, those have been great plays, what with palladium soaring from $115 or so an ounce to over $170 as I write this just before Memorial Day. The platinum/gold spread has gone from a dollar or so to over $40 an ounce. There are, however, lots of people who are interested only in equity vehicles. I think there is now a way for them to take advantage of the platinum-group metals (PGM) price explosion.

While by far the biggest producers of PGMs are in South Africa and Russia, there is an American company, Stillwater Mining (NASDAQ: PGMS), that has developed a working palladium/platinum mine over the past few years. It has been public since the end of 1994, and has reached for $30 a share twice since then. But the last peak was a year ago, and while palladium (its dominant product) has had a moon shot, Stillwater stock has bobbled around in the $20-$23 range. The reason, it seems, was that three of the company’s directors, who were originally nominated by a former shareholder, Manville Corporation, didn’t believe the PGM boom was real. They held back on capital spending, discouraged an exchange listing, and pressed the company’s management to sell most of the mine’s production for this year in the forward market before the price move got going in earnest.

JD

About the Author

John Dizard

Featured Tags

I’VE been bullish on palladium and the platinum/gold spread since January, and for those of you who feel comfortable dealing in the futures or options markets, those have been great plays, what with palladium soaring from $115 or so an ounce to over $170 as I write this just before Memorial Day. The platinum/gold spread has gone from a dollar or so to over $40 an ounce. There are, however, lots of people who are interested only in equity vehicles. I think there is now a way for them to take advantage of the platinum-group metals (PGM) price explosion.

While by far the biggest producers of PGMs are in South Africa and Russia, there is an American company, Stillwater Mining (NASDAQ: PGMS), that has developed a working palladium/platinum mine over the past few years. It has been public since the end of 1994, and has reached for $30 a share twice since then. But the last peak was a year ago, and while palladium (its dominant product) has had a moon shot, Stillwater stock has bobbled around in the $20-$23 range. The reason, it seems, was that three of the company’s directors, who were originally nominated by a former shareholder, Manville Corporation, didn’t believe the PGM boom was real. They held back on capital spending, discouraged an exchange listing, and pressed the company’s management to sell most of the mine’s production for this year in the forward market before the price move got going in earnest.