PLATINUM GROUP METALS

Scotiabank's Mohr names palladium as top commodity pick for 2011

Scotiabank's Pat Mohr said prospects for a further round of Fed ‘quantitative easing' is weakening the U.S. dollar, boosting commodity prices and extending the commodity price super-cycle.

RENO, NV - 

Scotiabank economist Patricia Mohr Tuesday picked palladium as a "commodity pick for 2011."

"Spot palladium prices should average US$510 per ounce in 2010 and US$650 in 2011, up from only US$265 in 2009 and US$352 in 2008," Mohr predicted in her October Scotiabank Commodity Price Index report.

Mohr noted that rising autocatalyst demand in China and other emerging markets, in the face of supply constraints, will boost prices.

Meanwhile, Mohr advised that sales from Russian state palladium stocks may drop near 2011 and Swiss palladium stockpiles are declining, "likely pushing the supply/ demand balance into deficit."

Silver prices rose to a near-term high of $24.49 per ounce on October 14. Mohr observed silver has outperformed gold in September and October, "gaining from its role as both an industrial and precious metal."

"The gold-to-silver ratio has fallen to 57.76 to date in October-the lowest since August 2008-and could well move lower in the coming months, with silver climbing to US$25-30," she advised.

In her analysis, Mohr also noted that spot uranium prices are currently $52 per pound, boosted by a production shortfall at Energy Resources of Australia (ERA) with the long-term base contract price increased to US$62.

Mohr also observed that LME copper prices rose to US$3.82 per pound on October 14, approaching the all-time record of US$4.08 on July 3, 2008. Copper prices rose to a new 28-month high of US$3.86 on October 25 on renewed U.S. dollar weakness after the G20 meeting.

"Fundamentally tight world supplies, with a widening ‘deficit' expected between refined copper consumption and production in 2011, and anticipation of a ‘soft landing' in China's economy account for this strength," she said.