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Johannesburg - Gold may shine in the short term, but platinum might be a better bet in the medium term.
This is the view of Max Koep, head of equities at Deutsche Bank in South Africa.
Koep said: "We view the ongoing global recession, risk aversion and limited capital flows through the first half of this year as leaving the US dollar exposed."
Investors turned to gold as an underlying safe haven in 2008 and into 2009 as equity markets crumbled and the US dollar weakened.
"While we expect gold prices to perform well in the first half of the year, we believe that the significant re-pricing of gold relative to the platinum group metals complex will unwind over the medium term."
In 2008, the platinum price rose to US$2 300 per ounce before selling off heavily late in the year to about US$800/oz. Since then, the price has risen back above US$1 100.
In contrast, the price of gold in dollar terms rose from about US$850 in January 2008 to break through US$1 000 in February 2009.
Deutsche likes these
In terms of gold, Koep said Deutsche preferred the underlying metal as opposed to specific stocks. Deutsche's preferred SA gold stock at present is Gold Fields from a valuation perspective.
Koep said the platinum sector was likely to be driven by both the automotive production and jewellery industries. Both are under pressure in the difficult economic climate, with the forecast being for 180 000 surplus ounces in 2009.
However, a turnaround in platinum stocks' prospects was likely to be driven by supply issues: "South Africa controls about 70% of the world's production and this will give us some control of pricing down the line," said Koep.
Deutsche prefers Northam Platinum, for which it has given a 2009 price target of 2 500c, while it has set price targets of R130 for Impala Platinum and R475 for Anglo Platinum.
It should be noted that all of these are now trading above these target prices after the recent rally in commodity stocks. Northam is trading at about 2 700c, Impala at R174 and Anglo American Platinum is at R517.
- Fin24.com