Basket Fix Comparison Since January 2019
Precious Metals Basket Since January 2019:
Let’s quickly look at each one and key ratios and relationships.
2019 witnessed a dramatic increase in Rhodium, Palladium, and Platinum, with substantial increases in Gold, and Silver.
1. Rhodium is up an astonishing 145% y/y in 2019
For three years I have been preaching to all of Precious Metals industry analysts that this structural deficit on Rhodium is just getting worse and worse. The Rhodium fix since 2016 reflects that. April 1, 2016 saw Rhodium at $740/Toz. Today, August 30, 2019 it’s at $5,000/Toz. That is a whopping 6.75x increase.
The Hard Disk Drive Industry PMR Transition 2006-2008
The Hard Disc Drive (HDD) industry has enjoyed a 50+ year lifespan. HDD’s have enjoyed multiple significant technology transition during that 50+ year span. One of the most dramatic technology transition by the entire HDD industry was a transition from Longitudinal Recording, to today’s Perpendicular Magnetic Recording (PMR). The use of Ruthenium layers on the media had a transformative impact on the bit density of the data stored on HDD’s. The HDD industry shocked the PGM market starting in 2006-2008 with a huge demand for Ruthenium PVD Sputtering Targets to sputter these layers of ruthenium on the media to enable this higher density HDD. The yield impact of this technology on a per drive basis was huge, over $2/HDD in drive yield benefit. Executives throughout the HDD industry could not transition their entire product portfolio’s quick enough to this new recording technology. The impact on the Ruthenium market was profound.
A Brief Emission Control Systems Background:
Platinum Group Metals (PGM’s), specifically Palladium, Platinum, and Rhodium are essential ingredients to today’s three-way auto catalyst emission control systems. They enable significant reductions in Carbon Monoxides (CO2), Hydrocarbons (HC), Particulate Matter (PM), Sulfur Oxides (SOX) and Nitrogen Oxides (NOX) into the environment. All of these are primary contributors to air pollutions. Lead efforts to reduce automobile emissions started in the early 1960’s. Then in the 1975 vehicle model year, new emissions standards, as well as the increase in fuel usage, forced the invention of the catalytic converter after-treatment of the exhaust gas. This is when PGM global demand really took off. Mining in S. Africa expanded to meet this emerging demand.