An Ignored Metal With Lots of Potential

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The Daily Reckoning | Thursday, January 24, 2013 Championing the disruption of state-sponsored currency... An armored truck at your door, full of a very under-appreciated metal... Plus, Byron King discusses “platinum’s neglected cousin,” and plenty more... ------------------------------------------------------ External Advertisement How To Make a High-Tech Fortune Thanks to a unique and largely unreported situation, you could turn $9,000 into over $200,000. In short, a tiny American company is about to revolutionize all smart phones and HDTVs. The best part? At around $9 a share today, even a small stake in this company has the potential to turn into a windfall. For complete details, please see our just-released research report RIGHT HERE. Quote of the Day... “The first panacea for a mismanaged nation is inflation of the currency; the second is war. Both bring a temporary prosperity; both bring a permanent ruin. But both are the refuge of political and economic opportunists.” — Ernest Hemingway Joel Bowman, reckoning today from Buenos Aires, Argentina... Stocks up. Gold down. Bitcoin...waaay up. The S&P 500 busted through the 1,500 mark this morning. Stocks haven’t been this expensive since 2007...right before they got a whole lot cheaper. Gold, meanwhile, dipped a tad, despite central bankers of the world goading it on, promising to dilute the value of their respective paper currencies against the Midas Metal. And what about bitcoin? Wait, what IS bitcoin? Why, it’s a speculation, of course; a dark horse beloved by anarchists, ne’er- do-wells and fringe-dwelling lunatics, the kind of people you wouldn’t invite to meet your mother-in-law. The very idea of bitcoin, a “decentralized, cyber-crypto currency,” has to it a ring of the unknown...of disruption, rebellion...perhaps even revolution. In plain English, it’s not to be trusted by members of polite society. But these are just some of the reasons we like it so much. We first brought you word of this underdog currency a couple of years back, shortly after it began making waves on Internet messageboards. The premise seemed appealing. It was — and still is — a bet against the future of central banks. Demand for the currency rests, in no small part, on the continued arrogance of the Bernankes, Shirakawas, Kings, Stevens and Draghis of the world. “The demand for a totally free market currency arose, naturally, out of the dismal state of the current monetary environment,” we wrote at the time, an environment “in which governments around the world systematically debase the value of their printed monies in order to pay for the various welfare-warfare states they promised but can’t possibly afford. The resulting inflation is sometimes referred to as a ‘sneaky tax,’ one that silently, insidiously infiltrates the marketplace, with each freshly-inked dollar compromising the value and integrity of each and every currency unit already in circulation.” It’s a bet on the other side of the state’s coin, the free market side. It’s a bet that voluntary trade will, in the end, overcome force and coercion. It’s a wager that the conversation currently underway in the shadows is far more intriguing, far more complex, far more nuanced and exceedingly more interesting than the yap- yapping that distracts the undead TV-consumer each and every night. [Ed. Note: You may remember that a few months a few of your favorite DR editors made the trek down to Rancho Santana in Nicaragua for one of our patented “Chill Weekends.” With so many top minds and great ideas, it turned out to be one of the best experiences we’ve ever offered. Well, we’ve scheduled another such event for February 23-27, and once again our Editorial Director, Eric Fry, will be in attendance. There are still two slots available. So if you’re interested in great investment advice from some of the top names in the industry in a picturesque setting, we suggest you drop a line to Director Marc Brown, right here: Marcb@ranchosantana.com] Outrage Could Be Imminent Over Controversial New Video... This video clip documents a miracle of scientific discovery — proof that you, your spouse and your children could accomplish what was previously thought impossible... But, as you’ll see, it involves what many in the world will believe is a violation of God’s will. In fact, there could be blood in the streets if CNN, FOX and other news networks air this video. Do you have the courage to watch it? The Daily Reckoning Presents Platinum’s Neglected Cousin By Byron King It’s a whitish, ductile metal. It is No. 46 on the Periodic Table of Elements...and it is a “Buy.” I don’t just mean that it is a solid investment opportunity in which you can buy shares. I’m talking about an opportunity so big, you could literally pull a truck up to the front door — but make sure it’s an armored truck, as I’ll explain below — and drive home with the stuff. The metal’s name is palladium, and it is used mainly in automobile and truck catalytic converters, particularly for low-temperature exhaust that emits from diesel engines. For high-temperature exhaust from gasoline-burners, you need platinum. But for diesel engines, palladium does the job. As the chart below illustrates, annual auto-catalyst demand is currently soaking up a whopping 81% of the world’s annual mined supply of palladium — up from about 60% just a few years ago. This chart also illustrates that the palladium price trend tracks very closely with the auto-catalyst demand trend. Back in 2000, for example, when auto-catalyst demand was consuming more than 100% of the mined supply (above-ground stockpiles plugged the supply gap), the palladium priced soared to more than $1,000 an ounce! Looking ahead, the auto sector is recovering in Europe, North America and across the developing world. Automakers have scheduled their production runs, and what’s the fastest-growing kind of vehicle? Diesel-powered. And that means rising palladium demand. Meanwhile, mine output of palladium is stagnant, while global stocks — primarily from Russia — are as tight as banjo strings. What Obama Can’t Do, These SIX Events Could I urge you, watch this eye-opening video presentation and find out WHICH six “jackpot” events are about to change your life... And could even make you richer, healthier and happier... in ways no sycophantic bureaucrat ever could! Click here and find about the SIX EVENTS about to change your life forever. Let’s cut to the chase. We’ve got a metal play here. So how can you invest in palladium? The Sprott Physical Platinum and Palladium Trust (NYSE:SPPP). Here are the basics: Recently, Sprott Asset Management LP completed a $280 million initial public offering (IPO) for this new trust. Sprott used the funds to buy refined platinum and palladium. SPPP invests and holds substantially all of its assets in physical platinum and palladium bullion, with a modest management fee (0.5% annually) — collected on a monthly basis — plus any other applicable Canadian or other taxes. The trust does not speculate with regard to short-term changes in platinum and palladium prices. It buys and holds. The idea is that SPPP offers ownership that is easier and less expensive than if one were to purchase, store and insure physical bullion directly. With SPPP, the metal is fully allocated, meaning that each bar is tracked. There is no “mixing” with other metal assets owned by other entities. Every Sprott bar is a distinct, traceable asset. Sprott stores the metal in secure, bonded facilities. Platinum bullion is stored at a secure location in Canada. Palladium bullion is fully allocated and stored in secure locations in London and Zurich. All physical metal is subject to a periodic “spot inspection.” The metal is also subject to audit procedures by external auditors at least annually. This SPPP trading format provides a secure, “exchange-traded” means for investors to hold physical platinum and palladium bullion. The trust units trade on the NYSE “Arca” list. The fund also trades on the Toronto Exchange (PPT:TSX). As an added benefit, there’s a tax advantage here for non-corporate US investors. If you buy and hold SPPP units for over one year and elect to treat SPPP units as a “Qualified Electing Fund” (QEF) on IRS Form 8621, gains realized on the sale of SPPP units should qualify as long-term capital gains. You’ll pay 20% under the new tax law — but be sure to consult your tax attorney or accountant for specific guidance. Also, SPPP investors have the right to make physical redemptions of platinum and/or palladium, under circumstances established by the Sprott group. If you own enough of SPPP, you can literally drive an armored truck up to the storage facility, complete the paperwork and drive away with your metal. (Of course, then it’s your problem!) The bottom line is that Sprott’s new SPPP provides a means of accumulating palladium without having to lift and store all those heavy metal bars. You are just one step away from actual ownership and possession, without the hassle of arranging your own storage and security. Meanwhile, the coming year looks strong for palladium pricing, such that SPPP offers a healthy upside. Indeed, if you want to know how your palladium investment is doing, just keep an eye on auto production numbers for diesel vehicles. We could see substantial gains in palladium over the next two years. Regards, Byron King, for The Daily Reckoning Editor’s Note: Byron is constantly tracking down the best investments in both the metals and technology sectors...and sometimes those things overlap. In his new presentation, he details one such overlap. One where a special “liquid-metal” could be used to power your smartphone or your computer. Sound intriguing? Click here to discover this substance for yourself. ------------------------------------------------------- Here at The Daily Reckoning, we value your questions and comments. If you would like to send us a few thoughts of your own, please address them to your managing editor at joel@dailyreckoning.com Additional articles and commentary from The Daily Reckoning on: Twitter Facebook DR iPhone APP The Daily Reckoning is committed to protecting and respecting your privacy. We do not rent or share your email address. 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