Buy platinum metal rather than the miners, says ShoreCap

Prospects of industrial action in South Africa could make speculation in platinum worthwhile, suggested stockbroker Shore Capital on Friday.

Platinum fell as low as US$760/oz earlier this week, ShoreCap analyst Yuen Low noted, but he suspect that the beleaguered metal "could see significant gains in the coming weeks".

Joseph Mathunjwa, the "firebrand" president of the militant Association of Mineworkers and Construction Union in South Africa, on Thursday threatened the platinum industry with a year-long strike if Impala and Lonmin proceed with plans to respectively retrench around 13,000 and 12,500 employees over the next two years or so.

Low said it was "no coincidence" that Mathunjwa was speaking at an event to commemorate the sixth anniversary of South Africa’s notorious ‘Marikana Massacre’ incident, when police shot dead thirty-four strikers outside Lonmin’s operations at the height of a five-month AMCU-led strike.

"We suggest that it would be wise to invest in the metal rather than the miners, given the possibility of troubles spreading (e.g. to Anglo American Platinum and Sibanye)," Low wrote in a note to clients.