RE: Chrome prices1 Mar 2021 09:30
Hi Sotolo!
First up, I'm gloomy about gold's prospects short-term.
Until a) inflation actually shows up (the jury is still out on that one), and b) the Fed actually brings in Yield Curve Control, the gold price is going to suffer. I also don't think reopening / vaccine optimism helps the gold price, either. Gold's rise was fuelled by hot investor money flowing into ETFs; a lot of that money may go off chasing a quicker profit in other places now.
But, that said, I view palladium, rhodium, and iridium as industrial metals, even though they are technically classed as precious ones. Unlike gold (most of the gold ever mined is still in circulation), they are "used up" by industrial processes, and so subject to the usual laws of supply and demand. And demand for them is very high (thanks to tightening clear air regulations), and their supply is very limited. So, I think the dynamics underlying their prices (and indeed also the price of chrome) are either favourable or very favourable in the short to mid-term.
(Caveats: by 2030 a fair amount of new Russian palladium supply may come online, affecting that metal. And, eventually, diesel / gasoline ICEs will be replaced by fuel cells/battery powered vehicles, though that changeover will be slower worldwide than many people think. Apart from anything else, there are electric grid problems that need to be resolved first.)
As for platinum, then first thing to note is that it doesn't make up that much of THS's revenues, and that its price has improved substantially recently. That said, I do think platinum is somewhat affected by movements in the gold price - like silver, it is half an industrial metal, and half a precious metal. Investment demand (its use as a precious metal store of value) does affect its price dynamics.
But all told, I think that's quite a trivial effect in terms of THS's revenue and profits. For me, this company is simply enormously profitable at the moment, and the market hasn't properly realised it yet. Five weeks now to the Q2 production update, which should contain a line about net debt / net cash position. That will be a real giveaway about how THS is actually doing.
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