Volkswagen Scandal Sinks Platinum Price!
Platinum Price Dives… Thanks To Volkswagen!
I have to admit, I’m astounded by the growing Volkswagen emissions scandal…
As you may have heard, the German automaker has been caught red-handed falsifying emissions data in half a million diesel cars here in the US.
Apparently, the company programmed their “TDI Clean Diesel” cars to emit low levels of harmful gases and diesel particulate under emissions testing. But when returned to the open road, the cars belched toxic fumes 40 times the US Environmental Protection Agency’s (EPA) limit.
To make matters worse, Volkswagen just admitted it found significant emissions “discrepancies” in 11 million diesel vehicles worldwide.
To think one of the world’s largest and most respected automakers is guilty of such appalling deception is mind-boggling…
Volkswagen’s fleet of diesel cars has been spewing excessive amounts of smog inducing fumes for who knows how many years.
What’s more, the company intentionally deceived environmentally minded consumers into purchasing a vehicle that was about as far from “green” as you could get!
It doesn’t take a rocket scientist to figure out a tidal wave of civil (and possibly criminal) lawsuits is about to overwhelm the once highly respected German automaker- not only from the EPA and similar government agencies the world over, but class action lawsuits from consumers in the US, and likely abroad.
Without question, Volkswagen’s image will be tarnished for quite some time from this debacle.
Believe it or not, this story is already having a big impact on the precious metals market…
The price of platinum is sinking to new multi-year lows thanks to Volkswagen’s outrageous wrongdoing.
See for yourself…
Why’s the metal careening lower?
In case you’re unaware, platinum is used heavily in the auto industry as a catalytic converter coating, especially in diesel engines. With serious accusations now arising over the environmental consequences of diesel engines, it’s quite likely platinum demand goes in the gutter.
Here’s where it gets really interesting…
At the same time platinum is sinking- palladium is rallying strongly.
As you can see, platinum’s close kin is swiftly breaking to new multi-month highs.
Why?
The market is likely pricing in a looming shift in consumers’ car engine preferences. Given the newfound uncertainty surrounding diesel, car buyers will likely steer towards gasoline powered alternatives.
Keep in mind, palladium is used more heavily in gasoline-powered engines- so demand may rise for the metal.
How do you profit from this situation?
Given the shocking developments at Volkswagen, and the change in consumer behavior it will likely bring, it may pay to initiate a long position in the palladium market. You can do so easily with a long position in the ETFS Physical Palladium $PALL.
Another way to capitalize on the situation is to get short the platinum market. This can easily be done by shorting the ETFS Physical Platinum $PPLT.
Bottom line…
Volkswagen’s deception is going to cause big trust issues with diesel cars. As a result, we could see a big disruption in platinum demand as consumers turn to “cleaner” alternatives.
Until Next Time,
Justin Bennett
Commodity Trading Research
***Editor’s Note*** The analysis you see above is commonplace in the Commodity ETF Alert. This bi-monthly publication focuses on the best opportunities in commodities, commodity based stocks, or commodity based industries.
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BIO: Justin Bennett is the head commodity research analyst at Commoditytradingresearch.com. With over a decade of real world trading experience, he finds ways for you to consistently profit from movements in commodities and the companies producing them. Sign up for our free reports and commodity newsletter at http://commoditytradingresearch.com/free-sign-up.
Category: Commodities
