Adam Sarhan Investor’s Business Daily Quote: Platinum Flying On Mine Turmoil In South Africa

IBD-Investors.com

Posted 08/20/2012 06:21 PM ET

Platinum jumped nearly 2% Monday, hitting a two-month high after deadly violence at a mine in top producer South Africa triggered heavy buying on supply worries.

Investors bought platinum on worries that mines in South Africa may produce less of the metal after 44 people were killed during a strike at the Marikana mine owned by Lonmin, which accounts for 12% of global platinum output.

“Platinum could test its 200-day moving average above $1,500 on the possibility that the Marikana mine can be shut down for an extended period of time or that the strike ends up spreading to other mines,” said Phillip Streible, commodities broker at R.J. O’Brien.

Spot platinum rose 1.6% to $1,487.49 an ounce, after hitting a high of $1,492.99 — its highest level since June 18 — by 3:03 p.m. ET.

The metal soared 7% in the past three sessions, bringing its year-to-date gain to 7%, which means platinum has outperformed gold, silver and copper so far in 2012. On technical charts, platinum’s relative strength index is at 69.8, just a hair below 70, which is seen as overbought.

“Markets that are overbought can very easily get a lot more overbought before they go down,” said Adam Sarhan, CEO of Sarhan Capital.

Speculative fervor in platinum futures was evident even as about a third of the workforce trickled back to work at Lonmin on Monday. Analysts said the lost platinum production due to the work stoppage at Lonmin has been negligible so far.

URL: http://news.investors.com/article/622832/201208201821/platinum-flying-on-mine-turmoil-in-south-africa.htm?ven=rss&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed:%20InvestingRss%20(Investing%20RSS)

If you enjoyed this post, make sure you subscribe to my RSS feed!