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Silver prices could outperform gold in the near-term and in longer-term the persistence of negative real interest rates will sustain the appeal of holding precious metals, said Deutsche Bank in a research note. Fed an..

30 Jan 2012

LONDON (Commodity Online): Silver prices could outperform gold in the near-term but in longer-term the persistence of negative real interest rates will sustain the appeal of holding precious metals, said Deutsche Bank in a research note. Fed announcement resulted in a strong positive move in the silver price.

According to Deutsche Bank, precious metals advanced as the Fed statement led to a weak USD against the Euro. Bank believes that renewed USD weakness could be exacerbated near-term by an unwinding of Euro-short positions and this, in addition to a moderation in deflationary or growth fears, could underpin a further rise in gold prices.

In the platinum market, Amplats recently reported worse than expected production results for Q4 ’11. This reflected a sharp increase in production disruptions from safety stoppages; the company is also expected to report high cost inflation and lower 2012 production targets as a result when it reports full 2011 results in mid-Feb. Bank believes that the challenges that Amplats face illustrates those of the PGM industry in South Africa as a whole as it adjusts to Section 54 representing the SA government’s desire to eliminate mining related deaths and injuries.

Bank expects that, as a consequence of government measures, it may be necessary for industry to rationalise some PGM production in order to quickly improve on safety statistics.

“We anticipate that PGM production could be significantly truncated from South Africa as a result. We believe that a long Platinum/Gold position is an attractive one given the current discount of platinum to the gold price,” Deutsche Bank concluded.


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