A scream buy for platinum?

I talked about platinum about a year ago in Nov, 2011. I thought platinum's price should capture up and surpass gold based on its rarity and historical valuation. It did attempt and was very close to the gold price in Mar this year but failed again. Their divergence climaxed in Aug but in the past few weeks, platinum has started its momentum and almost reached the pair with gold these days (see below).



 

Will it succeed this time to surpass gold? No guarantee but there is a good chance this time. Why? Shortage of supply due to significant disruption of mining production in South Africa (SF). You probably don't see much in the mainstream media but currently the mining industry in the S. Africa is fighting for its life due to the political struggles ongoing there. Without going into details, the radical left-wing politics are fighting with the governing African National Congress for power and the mining industry is facing nationalization. The unstable political situation has led to violent strikes, which paralyzed several South African mines this year, including most recently the giant Lonmin platinum mine. You see, SF controls about 70% of the world output for platinum. Any prolonged reduced production there will cause a steep price rise. I think this time platinum is catching up not simply based on its historical valuation, i.e. more valuable than gold, but more so because of the supply shortage. If I'm right, I think platinum's price will jump up sharply from here in the coming months. Of course, it may take a breath to pause or even decline a bit but that will only give it more strength to advance. PPLT is the ETF for platinum.