In the world of precious metal investment, South Africa looms large, in terms of both being a source of material and as an influencer on world markets through the very state of its business. The country has long been known as a source for many rich and varied forms of commodities; diamonds, gold, platinum, palladium, et al. But being as volatile and tempestuous a place as it is, the world market can fluctuate rapidly dependent on the mood and stability of the nation and its people.
Labor and mines are a major issue in South Africa, seeing as they are the main source for the very material in question. Mining production in gold and platinum has been a serious concern of late, as strikes and problems between laborers & police have impacted the workflow in a vastly negative fashion. (It goes without saying that the less workers you have in the mines, the less production there will be.) Mine safety also being a major concern, disasters such as collapses and trapped workers has given the local government enough pause to shut down some of the work zones, which naturally has also halted production and caused the flow of material to slow even more.
The effect of these problems is immediately and dramatically noticeable: the expected amount of new production of platinum to be put into the market in 2013 is 92% less than it was in 2011. Used in many automotive products, in addition to its worth in and of itself, this curtailing of production will naturally have a drastic effect on pricing. Palladium, another metal instrumental in automotive production, has also seen its production gone down, by 8% from 2011. And though far from the only source for gold in the world, South Africa’s contributions to the supplies of the precious metals are also on the downswing as of late, though that has been in a steady decline since the 1970s.
As the numbers above imply though, the production of palladium, while still lessening, is not in as much of a free fall as platinum or gold. Russia, one of the other big players in the world in that market, has been slowing its release of it as well, though it is being widely speculated that it is a calculated move to drive up pricing rather than one based in an actual shortage. South Africa’s issues are only playing right into their hands.
The unpredictability is key though. At any time, mines could be reopened, strikes could be settled or broken, and the production of any of the above could begin to spike again. It could also continue to trend downward, which would naturally lead to higher and higher prices. Precious metals investing is a tricky business, dependent as it is on so many different and unpredictable factors. The information one can glean from world news, from internet sites, from paying attention to the state of the government and the world, can all be used to your advantage in the investment game. The world acts, and you must react.