Although PGMs used to figure only slightly in Hallgarten & Company's Mining Portfolio, metals analyst Christopher Ecclestone is finally going palladium-ETF, not mining stock-for a pure play.

Author: Dorothy Kosich
Posted: Tuesday , 05 Jun 2012

RENO (Mineweb) -

The current look of the palladium market has prompted metals analyst Christopher Ecclestone, a PGM skeptic, to invest in a palladium ETF as a part of Hallgarten & Company's portfolio.

"The metal has been on a slide of late, but even the US auto industry is not very ill these days, we find little reason to be bearish on the prospects in any except a global meltdown scenario and the poor supply situation out of Russia, gives us nothing but good vibes on future price trends," Ecclestone said.

In a recent analysis, Ecclestone points out, "The numerous applications and limited supply sources of palladium result in the metal attracting considerable investment interest."

Over half of the supply of palladium and platinum goes into catalytic converters. In his analysis, Ecclestone noted global automobile production is expected to increase significantly while the use of palladium in diesel catalytic converters is also growing.

Palladium also plays a key role in the technology used for fuel cells.

In his analysis, Ecclestone observed the large Russian government palladium inventory "is at or near depletion (having provided approximately 25% of total palladium supply since 1990)." While palladium recycling is increasing, he believes it is "insufficient to offset a growing demand."

However, "as palladium usually plays second fiddle to platinum in virtually all PGM producers it would seem to us that eschewing the miners is the only way to get the best access," Ecclestone suggested.

"Card carrying fans of Stillwater Mining Company (SWC) will wonder why we have not graced that company with inclusion in the Model Portfolio. As the only one primary palladium producer in the U.S. it might merit consideration," he said. "However, the purchase in the last year of the Argentine copper/gold explorer, Peregrine Mining, for $487mn which many thought to be way too high a price, put us off favoring this stock."

"It merits watching if one wants a corporate play on Pd but we are feeling safer at the moment with a physical ETF," Ecclestone advised.

"In accessing this metal we preferred to go with a stake in the ETF Securities managed Physical palladium ETF (PALL) which offered the best pure platinum play in our estimation," he said.

Source: http://www.mineweb.com/mineweb/view/mineweb/en/page35?oid=152661&sn=Detail&pid=102055