Safe Haven in a Global Crisis of Trust

All investments are about buying something at lower cost to get higher return later. Investors must try to understand the values of things they buy and sell. Warren Buffett said you should never buy something that you do not understand. At a crisis time like today, investors must have a profound understanding of values not just of physical things, but of none-physical things as well, to survive and prosper.

In my last article, I discussed why physical things have intrinsic values and how are they determined. The article I am writing now is meant to be a sequel, so I shall continue on to discuss values of non-physical assets. Such discussion is urgently needed, and is made even more relevant today due to the unfolding global financial crisis and the Bailout Fiasco.

Our current financial and credit crisis is like a blackhole that Albert Einstein predicted. A blackhole is formed when a huge mass is packed within a very small volume. A blackhole's gravity pull is so strong that everything is sucked in and not even light can escape. So a blackhole will keep growing bigger as it keeps sucking in more matter. When the Large Hadron Collider was recently turned on to search for a ghost particle called Higgs, some feared it could generate a blackhole which could swallow the earth. But instead of swallowing the earth, the LHC merely spitted out a ton of helium before it was shut down, maybe for good, as nations in the world can no longer afford giant science projects like LHC.

But the real blackhole that threatens our survival is in the global financial system. Something that Warren Buffett called "Financial Weapons of Mass Destruction", the so called OTC Derivatives, a thing that no one really understands. It's such an enormous monster that by some estimate there's $1.14 quadrillion of them! That's a ONE followed by FIFTEEN(15) ZEROs. US$1,140,000,000,000,000 in OTC Derivatives! Where exactly is this huge amount of fortune physically located? This huge amount of fortune is actually nothing but merely some digits stored on some 3.5 inch hard drives within some computers in the Wall Street. That, my friend, is the definition of a blackhole, a giant mass stored within a tiny space.

The blackhole is swallowing everything around it, starting small and growing exponentially bigger. First it was New Century Financial (NEWC.PK), then Countrywide Mortgages (CFC), then Bear Sterns (BSC), Lehman Brothers(LEH), Merrill Lynch (MER), Fannie Mae (FNM), Freddie Mac (FRE), IndyMac Bank (IMB), Washington Mutual (WM), Wachovia Bank (WB). Who knows what's next! Now the US Congress wants to toss in trillions of dollars in a Bailout? Do they understand that you CAN NOT feed a blackhole?

The ongoing financial crisis is not a housing bubble or sub-prime mortgage crisis. It is not even a liquidity or credit crisis. Mr. Karl Denninger sums it up best in a 10 minutes video which all Americans need to watch and think carefully:

IT IS A CRISIS OF TRUST

Let me emphasize the keyword TRUST, because TRUST is the very reason any none-physical asset has value at all. It is also the reason why people must seek physical assets as the only trustable safe haven assets during times of crisis. It's easier to understand that physical things have intrinsic values because it costs something to produce physical things. When demand is high and supply can not catch up, people go to extra length to produce more at higher cost in order to meet the demand, and so the intrinsic value, as well as price, goes up in response.

Do non-physical things have value? They do. If you lend some money to your neighbor, you want to make sure your neighbor will pay back. There is a promise that you will be paid back. You trust that promise so it has value. The promise could be in any form: a notarized contract on paper, or just an oral promise, or merely mutual trust. As long as there is trust, the lending relationship has an intrinsic value based on the trust. And when there is no trust, a legal document is just a piece of worthless paper.

Lots of things in the economic cycles rely on trust and retain their values based on trust: loans, business contracts, agreements between nations. Without trust, the contracts written on paper are worth less than the ink and paper they are written with. Without trust, relationships can not exist. Without trust, marriages may break apart; organizations may disintegrate; financial systems may collapse and great nations may fall.

TRUST is THE single most precious thing in human society, bar none!

The US dollar is just a piece of colored paper. Does it have intrinsic value? I say it does have intrinsic value. The dollar's intrinsic value is not in the physical ink and paper, but in the trust that it represents. The value of the dollar is backed by the "full faith and credibility" of the US government. In the past our government did have pretty good faith and credibility. It was so trusted that the US dollar is the world's reserve currency and central banks felt more comfortable holding dollars instead of physical gold as their reserves.

But we have destroyed that trust and credibility by our chronicle reckless fiscal policy of debts and spending, from the top level leadership all the way down to average Americans. We spend way beyond our means, accumulate debts way beyond our ability to pay back. That destroyed our credibility and trust. That is the root cause of today's crisis, the systematic destruction of TRUST in the system, at all levels.

The US dollar is doomed! The only thing that can salvage the dollar is restoring the trust that the dollar is based on, by paying off our foreign debts using honest money, and then living within our means. I don't see any one discussing that solution, and I don't see how it can be done, physically, without breaking the back of our nation!

The US dollar is doomed, with or without the $700B bailout. Even restoring the gold standard is not going to help the dollar. The world simply do not have enough gold to back the amount of dollar in circulation, and our gold may not even be in Fort Knox any more. The dollar can only be based on TRUST, something infinitely more valuable than gold, but something that has been systematically destroyed in the whole system over a long period of time.

When there is no more trust in the system, you must get rid of any and all paper assets whose value is based on trust, and that means the only assets that are safe are those whose values are not based on trust: physical assets under your full control. Their values are derived from the mere fact that it costs something to produce them in the first place.

But when it comes to safe haven investments, I must reject the misconceptions and hypes some gold or silver bugs are attempting to inject into people's mind set. Notions that portrait gold and silver as money and hence the only good safe haven investment, and that anything not labeled as money is therefore not good. Of course gold and silver is money. That's a piece of 7000 years old news so it does not constitute a good reason why you need to buy or sell gold for a particular price, at a particular time. Folks who bought gold at the $800+ peak in 1980 lost heavily instead of found safety.

To avoid mistakes like in the 1980 gold and silver maniac, one must be able to correctly judge a physical asset's true intrinsic value, with all sentiments and hypes removed. Read my previous article on the discussion. A physical assets intrinsic value is its replacement cost, no more, and no less, and no sentiment or opinion attached here.

Some clarification is needed to the principle of intrinsic value as cited in my last article. Let me revise it as following:

A Commodity's Intrinsic Value Equals to the Marginal Production Cost

The cost varies when different producers produce the same thing. Marginal production cost is the cost of the most expensive supply source needed to meet demand. For example, the world consumes and produces 85M barrels of oil a day. 60M barrel come from easily oil fields at a cost of only $5 a barrel; 20M barrels come from oil fields that costs $50 per barrel; the last 5M barrels come from difficult marginal producing fields that cost $100 per barrel. What do you think the intrinsic value of oil is, then? We have to pay $100 or more to make it incentive enough for the marginal 5M barrels fields to keep producing to meet the 85M barrels a day demand. So the fair value of any commodity is always priced at the higher cost of marginal producers that's needed to balance the supply and demand.

All physical assets more or less serve as safe haven assets, where trust based paper assets can not be trusted. The only considerations to be given are their current price relative to their replacement cost, and the difficulties and costs in guarding, moving, storing and preserving those assets. All precious metals have excellent properties in those aspects due to their durability and high density of value in compact sizes. They are preferred choices as safe haven assets. So which one is best buy boils down to the question of current price relative to their intrinsic values.

Based on what I know, gold's current price is enough to keep most of the world's gold producers happily profitable. So gold is currently priced fairly. There is not much room for gold to gain in terms of real purchase power. Not to mention the world has a huge stockpile of above ground gold enough to last the world for hundreds of years. I expect the majority of people will continue to run towards gold. But I insist that gold is definitely NOT the best safe haven assets to buy today and I feel comfortable holding that minority opinion, as the majority in the market place is always wrong. For this reason I never bought GLD.

Silver is a bit different. 70% of the global silver supply is produced as a byproduct from base metal mining. Only 30% of silver is produced as a main product. Primary silver producers I monitor include Pan American Silver (PAAS), Silver Standard (SSRI), Hecla Mining (HL). Based on current silver price, I hardly see these primary silver companies make profits. Some silver companies have already started shutting down unprofitable mines. More over, even those mining companies that produce silver as byproduct, are now unprofitable, due to raising costs and weaker pricing of their main base metal products. As these companies are forced to reduce or shut down their base metal operations, it will also reduce the silver supply. So silver is definitely under-priced now and it is a better buy than gold.

But platinum, especially palladium, is extremely under-priced now, if you understand who produce these metals and what their cost basis are, and particularly if you understand the continuing South African electricity crisis. South Africa produces 85% of the world's platinum, and 35% of palladium. According to a recent survey, SA's PGM industry average cash cost is about US$1000 per ounce basket PGM metal (60% platinum, 35% palladium and 5% rhodium). That was based on one year old data. Today, due to high inflation rate in SA and US dollar depreciation, the cash cost is probably close to $1200 per ounce basket metal. Adding administrative overhead cost, the total operating cost is probably some where in the neighborhood of US$1350 per ounce basket metal.

Today's market price of the basket PGM metal price is $870 (=$1000*60% + $200*35% + $4000*5%). That's way below the $1350 needed for profitability of the SA's PGM mining industry. No business can operate at heavy loss indefinitely. The market must soon start to pay better prices, or SA will be forced to reduce production or shut down mines. I am wondering why they have not already done this. It would help ESKOM to reduce electricity load and help they profit! But I think it is only a matter of time they will do something.

When it comes to palladium, the world's largest producer is a nickel mine in Russia, Norilsk Nickel (NILSY.PK), with main product nickel and copper. Let's look at their cost basis. In 2007, the Norilsk mine's total operating cost was US$8.5B while metal sales revenue was US$14B. Using today's depressed metal prices, the metals would sell for only US$7.7B, while inflation will bring the cost higher to US$10B, making Norilsk totally unprofitable today. Norilsk's share price plummet reflect the reality of heavy operational loss at current metal prices.

Not to mention the incalculable cost of environmental destruction, as Norilsk is ranked No. 7 on the list of the TOP TEN most polluted places on earth, contributing a whole 1% of the world's sulfur dioxide emission. The pollution is so bad that there is not a single live tree or fish within a 48 kilometers radius from the mine! Why should such a heavy polluter continue to produce, if it can not at least turn a profit? Mr. Alexander Bulygin, RUSAL CEO, after visiting the site recently, issued an open letter calling the environmental situation as on the "brink of catastrophe".

According to an information bit that Jack Lifton discussed in his article, shutting down the now unprofitable Norilsk mine, and hence removing 45% of global palladium production, is now quite a strong possibility. A news story on Sep. 30, 08, where Mr. Anton Berlin strongly hinted at Norilsk's intention to cut production soon in response to weak nickel price, further enhances such a possibility. Remember I first mentioned Mr. Anton Berlin on June 12. At the time his comments caused a knee-jerk reaction in the global palladium market.

If Mr. Oleg Deripaska, who currently own 25% of Norilsk, gets his way and shut down Norilsk mine to clean up the pollution and wait for nickel price to recover, it will be the ultimate Russian Checkmate in the global palladium market!

Could such a Russian Checkmate happen? Could it not happen?! Why the Russians should continue to produce this environmental catastrophe, at a heavy operational loss, and for how long?

We are talking about a narrow market where industrial demand already exceed supply, and now 45% of that supply is further removed! I can't even imagine how high palladium price can go! Remember it took less than 4% shortage to jack up rhodium price from $300 to $10000!

In 2004, Norilsk acquired a 54% stake of Stillwater Mining (SWC), America's ONLY producer of platinum group metals, strategic materials of extremely critical importance to the nation's security, especially at war time, after some highly political negotiations involving Bush and Putin. Norilsk promised it was a purely non-political business deal. There is no Russian face on the board of SWC. But Norilsk's strategic aim of dominating over 50% of the global palladium supply is crystal clear.

Are the Russians going to use their monopoly power for profit, or would they rather act like a Santa Clause, operating a global charity organization, polluting their own fatherland and providing the world with cheap palladium at a price far below cost? The answer is clear.

In light of recent plummet of platinum and palladium prices, I have never seen a commodity market so completely rigged to the opposite of fundamentals, defying every logic and rationality. Palladium is now so under-valued that you look around the world, there is not a single palladium producer who can produce the metal and make a profit: Not Norilsk; not any South African PGM mine, not SWC and certainly not PAL. They all produce at potentially heavy loss now. This is not the normal affair of any market.

Can you name another commodity which every single one of the producers in the world is producing at a heavy loss? Have you seen another commodity price chart like this one, or this one, where price shot up on a straight line and then fall perpendicular down?

The excuse is lack of recent ESKOM news so people assume they have fixed South Africa's electricity crisis. I know better. Another excuse is slow economy and high gasoline price suppressed auto sales and reduced PGM metal demands in the auto catalytic converter sector. I know it's not true. Globally auto sales is still growing due to strong demand in emerging economies offsetting any fall back in western markets. According to General Motors (GM)'s own data, in the US market, even though GM delivered fewer vehicles to dealers in September comparing with a year ago, at the retail level, the retail sales were 303,300 in September, up from 255,744 in last September. That is 18.8% up y-o-y.

The credit crisis forced auto makers and dealers to massively reduce inventory, but people still need vehicles for their daily needs. Higher gasoline pushes up demand from people to junk their oil guzzlers in favor of a new fuel efficient car. Even for those people who decide to keep their old vehicle longer, the catalytic converter in their old vehicle will be unavailable for recycling, so it doesn't change the PGM supply/demand balance.

More over, the lesson from the year 1980 is that although auto demand did collapse that year, platinum and palladium price nevertheless run to a peak together with gold and silver, as investors hoard all precious metals as safe haven assets at that time. When there is significant investment demand of the physical metal, the industry demand becomes a moot argument.

Absurdity is now the norm of the marketplace. Like in the global coal market, I discussed on June 20th, 08 that the global coal supply and demand is largely balanced, with abundant coal reserve. I did not know how the coal price managed to triple in a few months, and called for folks invested in coal stocks, like ACI, ANR, BTU, CNX, FCL, FDG, JRCC, to take profit. The call was proven to be timely. The plummeting dry shipper stocks, like DryShips (DRYS), suggests there is not a lot of coal shipped across the oceans, so US coal market remains a local market. Amid a looming US economic depression, I see the US coal market as bearish in short to mid-term. Get out of any coal stock at the next rally! I am seeing JRCC dropping to the low $10-ish, for example.

Natural gas is a different story and remains bullish due to fast depletion of conventional natural gas sources, and drop of imported LNG volume. I own some NGAS and UNG by the way.

Needless to say I am still heavily invested in SWC and PAL, two of my favorite palladium stocks, and I suffer heavy losses in them. I have repeatedly checked my original thesis of a palladium super bull market but could not find anything wrong. I still believe this is one of the best investments I can find in short term, so I am sticking to my convictions. Is it any strange that today logic and rational thinking has been replaced by manipulation, distortion and absurdity? Otherwise we would not have a global financial crisis like we see today. At the end of day things will have to return to the way natural laws mean them to be. As billionaire Mr. George Kaiser is still patiently holding nearly a majority stake in PAL, I think I have patience to wait for natural things to happen as well.

Full Disclosure: The author is heavily invested in SWC and PAL, and also owns OMG, SLV, PAAS, HL, SIL, NGAS and UNG.

Investing In a Resource Constrained World Part Three

Wow! What a turbulent marketplace lately! I took some hits lately in my holdings of PAL and SWC, my favorite precious metal palladium mining stocks. But nothing compares with the shocking collapse of BSC, which falls from $60+ to only $2 a share bought by JPM, in just two days. I have sympathy in people who lost big money in BSC. Maybe LEH is next victim? Maybe WM? CitiBank? Maybe even the invincible MER and GS could also fall. There is so much panic and chaos in the financial market.

Recently, Gene Epstein published a cover story on Barrons declaring a commodity bubble is bursting. Has commodity topped? Do we see a commodity bubble bursting? I must point out that Mr. Epstein is completely wrong! I am NOT disputing any of the numbers or facts he cited, but he completely mis-interpreted the facts, and even reversed some causual relationships.

Prices of commodity is determined by the supply/demand balance. If supply exceeds demand, price goes down, but if demand exceeds supply, price goes up. When there is a shortage, the price will keep moving up until eventually the supply/demand reaches equilibrium again, often times due to higher price stimulates increased supply and supresses demand. But there could also be cases where higher price actually stimulate demand and supresses supply!!! I will talk about that later. Depending on how price elastic or inelastic the supply and demand is, equilibrium price could be achieved quickly, or the price could be pushed to an extremely high levels, like rhodium. Price appreciation alone does NOT tell you whether something is over-priced or under-priced, supply and demand data does. Please repeat the previous sentence one more time.

Unfortunately, in his long article, Mr. Epstein meantioned not a single word, and cited not a single number regarding the supply/demand relationship. What audacity allowed him to claim there is a bubble, when he can't even tell us how many barrels of oil the world produces a day and how many barrels it needs! All he ever did was showing us some price data. Now repeat my previous highlighted sentence one more time.

Mr. Epstein talked about speculative hot money chasing a relatively narrow commodity market, and he believed that's the reason we currently have a commodity bubble and it is bursting. He got the causual relationship completely reversed! The commodity bull market is NOT caused by investments by speculators. It's the opposite, the commodity bull is the reason that attracts investors to put their money in it. Anything that is bullish or hot of course naturally attracts investor money and speculators. If that alone makes it a bubble, then a lot of things are bubble: You buy bonds and the bond market must be a bubble, you deposit your money in a bank and it must be a bubble. You go to Wal-Mart shopping and Wal-Mart must be a bubble, too. Actually Wal-Mart must be the largest economical bubble to be popped imminently, judged by how every one visits Wal-Mart daily and spend their money there. How ridiculous!

Can there be a commodity bubble? Of course. Can speculative investments cause a commodity bubble? Of course. A bubble is formed when the price is high enough to correct the natural demand/supply imbalance, but artificial demand by speculative bidders keep pushing price much higher from the level supply/demand already balanced. We are far from even reach the supply/demand equilibrium yet for any of the commodities, let alone form a bubble yet.

But Mr. Epstein did get one thing right, that is, even though only a very small number of funds are chasing the commodity market, the amount of money involved is already a huge amount comparing with the size of the commodity market. That is absolutely right. But it is NOT the reason we have a commodity bubble here. Instead it is the reason for the extreme volatility we see in the market place. We see silver price jumps up and down 2 dollars a day, an un-precedent volatility. That's exactly because too much speculative money is chasing too narrow a physical silver market. Try to squeeze 100 people into a 25 square feet room. They MUST fight fiercely. When a huge amount of money is concentrated in a narrow market, exceptional volatility must be the result, but it doesn't change the fundamentals, volatility will wash out some of the speculators, which is one way the system achieves some sort of balance.

So what does the supply and demand fundamentals say about current commodity market? Two things decide that commodity shortage will be a long term phenomena. First, governments of the world are printing exponentially increasing amount of fiat currency to flood the market. Fiat money is one thing that is definitely NOT in short supply. Their purchasing power are dropping rapidly nowaday. When purchasing power of fiat money drops, instead of supressing demand on commodities, it actually stimulates stronger demand. For money discussions I urge you to visit Gold Is Money and JSMINESET.

Here is an example. I learned last week the price of rice is going up rapidly in international market. Does the higher price make me pause to think about how I should eat less rice? No! I rushed to the nearest COSTCO and picked up TEN bags of the 50 pounds rice, at a price which is still cheap, I used up all the cash in my wallet, or I would have bought more. I am concerned that when the news of rice shortage spreads, there will be panic buying and the shelves will be empty in no time. I do not intend to cause a panic, and I am not speculating on rice to make profit. I am just hoarding some for my own consumption. But here is a good example raising price actually stimulates my purchase demand. Not only higher price stimulates demand, it also supresses supply. Vietnam, India, Cambodia all decided to cut back or totally shut down their rice export, reducing supply to the international market. Is this a bubble? No, there is a real global shortage.

China has too much of US dollars in its foreign exchange reserve, but not enough of anything else. It doesn't have a significant strategic oil reserve. It doesn't have any strategic base and precious metal reserve of any significant size. If the import oil is interrupted, China could be crippled in less than 15 days. If there is a major conflict in the future, China could not last more than a few months if its outside source of metals, and other critical commodities were cut off. China desperately needs to spend out its huge reserve of dollars before it becomes worthless, and stock up some strategic reserves of any thing and every thing that it could buy. And who is to say Japan, Korea, India, Brazil is not on the same boat? Facing an uncertainty future of a crisis looming world, every nation on earth desperately needs to hoard up something and everything to secure its own future. And individual persons are doing the same hoarding and preparation, too. This factor alone will mean we will have a very very long commodity bull cycle.

The second thing that decides that we will have a long commodity bull cycle is the fact we live in a resource constrained world. The earth has a limited size, with limited natural resource on its accessible surface. Have you heard about Peak Oil? King Bubbert's Curve? It's a flawless mathematical derivative that says when a limited, non-renewable natural resource is being produced, the annual production rate reaches a peak when about half of the resource is depleted, production enters a permanent declining phase once we go past the half depletion peak, regardless any technology progress or improved efforts to produce more.

I believe the current commodity boom cycle is different from all previous ones. Previous commodity bull cycles are just a part of economic natural cycles of boom and burst. But for the first time in history, the current commodity boom cycle is closely related to the peaking and depletion of many critical natural resources we have become addicted to. That includes oil, natural gas, coal, precious metals and base metals. We have only 9 years worth of proven reserve of natural gas, the global oil production has just peaked, global silver production has long peaked and only have 13 years worth of production left. Copper has probably peaked already and there is 27 years left. (Check out these natural resource stocks: NGAS, CHK, SWN, JRCC, PCU, FCX, TGB, PAAS, CDE, SSRI, MGN, just to name a few)

Once a none-renewable natural resource has peaked, the annual production enters a permanent ever declining phase, despite of best effort of technology to boost production. So supply will be limited and will be ever declining. Higher price will have virtually no effect in boosting supply. Therefore there is only one way left to bring equilibrium back: supression of demand, otherwise known as demand destruction.

Has commodity cycle peaked? The answer is in whether the supply/demand has be brought back into equilibrium? The answer to the later question is has demand destruction occured? I do not see demand destruction occured in any thing yet at all.

Demand destruction in food items would be massive occurance of famine and mal-nutrition globally; Demand destruction in oil would be that people give up their SUVs and ride a bike 20 miles to go to work every day; Demand destruction in copper, zinc and steel would be we see the Fed issuing plastic pennies, and auto makers promote plastic light body vehicles; Demand destruction in platinum and palladium would be that people get married with a plain silver engagement rings, with no diamond; Demand destruction in tellurium would be FSLR shut business down. I do not see any of the demand destruction happen yet. People complain about higher prices but they just pay more to get the same thing.

On engagement rings, I believe true love does NOT take a compromise. Read this story:

For some people, however, no compromise is acceptable. Take Noah Cuttler, 29, of the District. He met his true love, ... about a year and a half ago ... and Cuttler decided two months ago he was ready to pop the question. ...

He knew platinum was the metal of choice, ... Finally, he pulled out his credit card and charged $1,000 for a platinum band from his dealer and several thousand dollars more for a 1.3-carat diamond. He plans to propose after she reads this article.

". . . it's supposed to be for a lifetime," he said.

Mr. Cuttler must have proposed to his love by now and I wish the best outcome for this couple. He is surely not the only one who falls in love. Across the ocean, millions of young Chinese couples have planned to get married in China's Wedding Year 2008, a year with special significance to the Chinese, not only because the number 2008 starts with a 2, meaning "The couple" or "both of us" and ends with a lucky number 8, signifying "fortune", and the year 2008 is the Gold Ox year in Chinese zodiac, but also because it's the year of Olympics in China, which is scheduled to start on 8/8/2008, triple fortune, I guess. Estimates in China are that 2 or 3 times more people will get married in 2008 than an average year. My estimate is there will be 35 million or more weddings held, about 5% of the population or more.

Getting married is a commitment of lifetime and the Chinese do NOT take any compromise. A platinum diamond ring is a must have in a wedding preparation nowadays, among other things. People with less affordability may settle for a palladium diamond ring, but will not compromise for anything less. A typical Chinese couple would pour resources from parents and friends, on top of their lifetime savings, just to make a lavish wedding happen, because they are judged by people on how lavish a wedding they could afford to carry out. A compromise on a platinum or palladium diamond ring is just unthinkable due to the social peer pressure.

If only half of the 35 million newly wed Chinese couples buy a platinum or paladium diamond wedding band, each containing half ounce of the metals, that would be a demand of 9 million ounces just in the Chinese jewelry sector. The whole world produces only 7 million ounces of each of the two PGM metals a year from mines. The prices of PGM metals have got to shot through the roof.

Thus I encourage people to take advantage of recent price dip, and buy stocks of the only two primary palladium mining companies in the world, PAL and SWC. I have explained the two earth shattering events in the PGM metals market. The fundamentals have not changed a bit at all. South Africa is now on mandatory electric power rolling blackouts and it is entering the winter season, which makes matter worse. The Russia stockpile sale still has not shown up in the Custom of Switzerland. The recent downfall of the PGM metals, which coincidented with the knock down of gold and silver, is nothing but inherit volatility when too many speculators jumped on board. Once the excessive is shaken out, which I think is about finished by now, the PGM metals should continue the rally up in no time.

P.S. The author owns stocks of PAL and SWC, and hoards physical tellurium, gold and silver.