Platinum is Trading at its Lowest Level in 14 years

ArticleChange of moneyJuly 4, 2018 - 6:04:59 AM

Breaking news: Platinum trades at its lowest level in 14 years a godsend for investors ; major chinese banks support the yuan by getting rid of the US dollar; gazprom affirms its leading position in Europe.

Platinum is trading at its lowest level in 14 years, a good thing for investors

Platinum prices fell by more than 5% to $811.10 per ounce in the markets, the lowest level since July 2004.

The precious metal price index has experienced turbulence over the past two years. The abandonment of internal combustion engines, particularly for diesel-powered vehicles, has reduced the demand for this precious metal.

In addition, the trade war between the United States and Europe now involves the automotive sector, reducing the value of platinum.

Threats of tariffs on vehicle imports, in addition to the tariffs on steel and aluminium already imposed by the US on the EU, will have an immediate effect on platinum if they are applied.

The European bloc exported 43.6 billion dollars worth of vehicles to the United States in 2017, while 7.2 billion dollars worth of cars were exported in the other direction. The automotive catalyst market accounts for more than 40% of platinum end-user demand and European automotive manufacturers, where diesel represents about 50% of the market, are the main industrial consumers of platinum.

A risky bet that could however generate significant profits. This is the opinion of many investors who do not hesitate to jump at the opportunity to increase their assets at lower costs. A real godsend to invest in this rare and precious metal having, in the same way as gold and silver, the status of a store of value.

Gazprom affirms its leading position in Europe

The leading Russian producer Gazprom is increasing its natural gas production in order to increase its exports abroad and thus assert its leading position in Europe.

Gazprom increased its overall gas production by +8.7%, or 253 billion cubic meters. Exports to Europe also increased +5.8% to 101.2 billion cubic metres, a record for the company.

In June 2018, Gazprom's exports to Germany increased by +12.4% and to Croatia by +13%. In France, exports have almost multiplied by 1.7.

According to Gazprom Managing Director Aleksey Miller, gas exports to Europe will reach a record 200 billion cubic metres this year. According to Mr. Miller, the main growth factors in demand are the increase in economic activity in European countries and a decline in European gas production.

The Russian market share in Europe in the natural gas sector increased to 34% in 2017. Europe also imported 24 % from Norway, 13 % from LNG and 11 % from Algeria.

China's Big Banks Support the Yuan by getting rid of the US Dollar

China has gradually reduced its share of the greenback and is promoting its own currency. Beijing recently began trading oil in yuan, a significant way to challenge the dominance of the U.S. dollar. China and Russia are also planning to launch agreements in ruble and yuan to circumvent the dollar and other Western currencies.

Chinese banks also bought massive amounts of US dollars from the Chinese central bank and immediately resold them on the yuan foreign exchange market in order to support the national currency and eject a large share of US dollars.

A government central bank buys national currency when it wants to strengthen it. By protecting the purchasing power of the national currency, the country protects its citizens from the risks of inflation and rising consumer prices.

The government can also weaken the national currency by selling it on the foreign exchange market. Even if it harms the domestic consumer, this measure is useful for large exporting economies such as China. This makes export goods cheaper to produce in the country and therefore more competitive on the world market.

The government can also weaken the national currency by selling it on the foreign exchange market. Even if it harms the domestic consumer, this measure is useful for large exporting economies such as China. This makes export goods cheaper to produce in the country and therefore more competitive on the world market.

The yuan weakened to a low of 6.7204 against the dollar, the lowest since August 7, 2017. The problem is that this drop in the Chinese currency comes before July 6, the date of application of U.S. customs duties on $34 billion worth of Chinese goods. Beijing has promised to retaliate by imposing tariffs on US products.

Source: BUNKER GOLD&SILVER

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