Over a million ounces of platinum have been lost to the South African mining strike, which is now entering its 20th week.
The strike is one of the longest and costliest in recent history.
It’s an ugly situation, for sure.
Estimates suggest that a global shortfall of 1.22 million ounces now exists.
As you can imagine, platinum prices have pushed vertical to $1,727 an ounce.
Platinum, the most precious of metals, now enjoys the widest spread to gold prices ($88.85) since August 2011.
At some point, the strike will end. Especially since the government is putting pressure on both sides to settle.
So be ready, because there’s a pot o’ gold sitting at the end of this strike. In fact, this is one of the easiest profit plays I’ve seen in the last five years.
Hint: What’s the one thing in the world that can’t exist without platinum?
The answer? Fuel cells!
The fuel cell industry was cruising along prior to the strike.
In fact, with virtually no fanfare, it was among the top-performing niche industries in the market, as evidenced by the Nasdaq OMX Fuel Cell Total Return Index (^GRNFUELX).
Then the mining strike hit, and the bottom fell out of the rally (like a falling piano).
You see, platinum is critical to the production of fuel cells. In fact, the properties in platinum that fuel cells depend on can’t be replaced by any other resource on Earth.
Platinum helps generate power through the electrochemical reaction of oxygen and hydrogen.
The unavoidable reality is that higher platinum prices will hit fuel cell manufacturers where it hurts most – their bottom lines.
Companies like Ballard Power (BLDP), ITM Power (ITM.L), Hydrogenics (HYGS), Quantum Fuel Systems Technologies Worldwide (QTWW), FuelCell Energy (FCEL) and AFC Energy (AFC.L) have all experienced dramatic declines in their share prices.
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Remember, before the strike, these companies were the darlings of the stock market.
So what do you think is going to happen when the miners get back to mining?
Exactly! So let’s thank the market for this generous gift and buy shares at the Opening Bell.
Onward and Upward,
Founder, Wall Street Daily
More Storylines Impacting Markets
Consumer Sales Cliff Dive in Japan
Japan released its April retail spending numbers – and the news isn’t good.
Total retail sales declined by a whopping 19.8% from the March number, and are down 4.4% year over year.
Sadly, that’s not even the worst news… Large Japanese retailers reported spending declines of 25% from March (-5.4% year over year), while B2B sales fell 20.4% in March (-3.7% year over year).
This represents the lowest level of consumer and business spending in Japan since the March 2011 earthquake and tsunami that took the lives of more than 19,000 people. And the news confirms the economic slowdown after the disastrous auto sales numbers for March, in which sales of trucks and automobiles in Japan declined by 63% – from nearly 940,000 units to just over 345,000 units.
Central bank meddling is failing everywhere, and Japan isn’t immune.
All That Glitters…
Hedge funds decreased their positions in gold at the fastest pace this year after prices showed the biggest monthly decline since December 2013.
Monthly numbers indicate that money managers reduced their long positions by 24%, as a mid-month equity rally propelled stocks to record levels. At the same time, short positions in the metal are now at the highest level in more than three months.
What’s interesting is that the decrease in gold positions occurred during the week in which the government revised its Q1 GDP growth to -1.0% from the previous estimate of +0.1%.
Expect this trend in momentum to continue through the third quarter.