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Palladium $469

The precious metal is soaring, following the power crisis that hit South Africa. The country accounts for 36% of the world’s supply of palladium, with the rest supplied by Russia and North America. Russia has planned to boost supply as production in South Africa will see a slowdown. However, further support to the bulls could be provided by the car making industry, as palladium can be used to manufacture catalytic converters. With the supply of platinum, which is the main component used in catalytic converters, facing an even more severe slowdown due to the crisis in South Africa, car makers may decide to increase their stocks of palladium, used mainly in non-diesel vehicle catalysts. The problems in South Africa won’t be solved quickly, as the country lacks investment in new power plants, and production of Palladium will have to be ramped up in other parts of the world to make up for diminished production there. We suggest going long on palladium in the short term, looking for new record highs.

ACTION: BUY Palladium • Target $500 • Stop Loss $450

TIME TARGET: 4 WEEKS