By Jon Nadler
Gold received a good number of 'buy' votes overnight, although it remained in the same price channel as that we saw on Monday. A softer US dollar contributed to the successful buying campaign in bullion and the metal rose to a high of $740 once again in the hours preceding the NY opening. Global economic conditions continued to offer a very poor platform and thus, would-be buyers voted with their shrinking pocketbooks and stayed away from auto and other showrooms in droves.

Japan's auto sales fell to their second lowest level ever, in the past month. Inexplicably, the Nikkei rose 537 points overnight. In the US, Circuit City is short-circuiting 155 of its stores in a last-ditch, 11th hour effort for its own campaign of survival. It's the consumer, stupid. and no longer the stupid consumer.

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Yesterday's NYSE "Inside Commodities" conference concluded with fairly optimistic forecasts for the niche in coming years, but also with the realization that the next year or two will first present challenging (read: poor) conditions for all kinds of 'stuff.' The BRIC-driven hoped-for demand for commodities is having as much success keeping aloft as...a brick does.

Commodities guru Jim Rogers offered the audience his by-now-familiar Sino-centric vision of the future, and gave listeners more than a veiled commodities-related clue when he produced stolen packets of white sugar that he intends to smuggle back to his home in Singapore. Agriculturals and water appear poised to become the new gold and oil of the commodities world in coming years, according to more than one panelist. Ready for the 'rice standard' world?

New York gold prices started their Election Day session with a nice, conservative $15 gain, quoted at $738.00 per ounce as participants managed to somehow get out of the long voting lines in time to send some buy orders to the floor. The day might not lack drama, as oil was up more than $1 (@ $65 per bbl) and the greenback fell nearly 0.95 to 85.47 on the index.

Gold needs to achieve a victory over the $750 level if it is going to mount a landslide on the $780-$800 level anytime soon. Election-related market punditry has the US dollar getting a possible boost from an Obama victory. Silver gained a more liberal 30 cents, to start at $10.09 per ounce, and platinum rose $14 to $826 per ounce. Palladium climbed $10 to $207. Perhaps a case of 'things cannot get much worse' or a simple case of 'oversold, and then some.'

Our good reporter friend, Moming Zhou, over at Marketwatch sums up platinum's recent slump as follows:

"Platinum, which is more expensive and more scarce than gold, has seen prices drop 46% so far this year, beating gold as one of the worst performers of the precious metals.

Platinum is often used as a barometer of both economic growth and investment confidence, as it's widely used by automakers and also held by investors. As turmoil roils the global financial system, platinum has been hit hard as the economy slows and investor confidence weakens. And as the global economy slides further into uncharted territory, platinum prices could move even lower, say analysts.

"One of the main reasons why platinum prices have declined sharply is the weakness in the auto industry," said Rohit Savant, a metals analyst at CPM Group in New York. "A deteriorating financial environment across the globe has begun to take its toll on demand."

Platinum futures in New York surged to an historic high of $2,286 an ounce in March, more than double gold's historic high of $1,003 an ounce hit in the same month. But platinum has since slumped 64%, while gold has fallen 28%.

On the New York Mercantile Exchange, platinum for January delivery dropped to as low as $752.10 in October, the lowest level since November 2003. The contract closed at $827.10 Monday. Gold for December delivery ended at $726.80 an ounce.

Scarce metal, weak demand

Platinum is among the world's scarcest metals. New mine production totaled 5.7 million ounces last year. In contrast, the world produced 60 million ounces of new gold and 530 million ounces of new silver in the same year. Among the 7 million ounces of platinum the world consumed last year, more than 60% was used by the auto industry, according to CPM Group. Industrial demand is expected to slow this year as global economic growth is seen weakening and auto sales stalling.

Platinum is widely used as a catalyst in car engines to reduce harmful tail pipe emissions. Tightening and spreading global emission standards have increased the importance of platinum and other platinum group metals such as palladium. Platinum used in cars reached 4.3 million ounces last year, up 6.5% from a year ago, according to CPM. But this year, demand won't be as robust.

Major car companies reported declining sales for October with the auto industry posting its worst monthly U.S. figures in 25 years. In the next 12 months, U.S. car sales could fall to levels last seen during the early 1980s recession, according to some forecasts.

CPM estimated that the growth rate of global car sales will slow to 1% this year, lower than the 1.9% it forecasted in May. The decline in growth is a result of the rapid deterioration in the health of the global economy, the consultancy said.

Auto production and sales are expected to weaken further in the next year. In addition, there also is a shift in consumer preference toward smaller vehicles, which typically require smaller auto catalyst. Platinum is also used in the electronic industry and as a catalyst in petroleum refining. As global oil demand slows, platinum is getting another hit. Refining and electronics accounted for about 10% of platinum demand in 2007.
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