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Platinum funds suffer record losing run as metal pummels Lonmin

‘Fund managers don’t think there is going to be a lift in demand,’ metal strategist says.

Investors cut holdings in exchange-traded funds backed by platinum for a record 13th day, with tumbling prices of the precious metal also driving shares of Lonmin, the third-biggest producer, to an all-time low.

Holdings in the ETFs have dropped 7.6% since October 21, according to data compiled by Bloomberg as of Monday, as platinum bumps along around the lowest prices in six years.

“The platinum ETF story is one that reflects a general malaise in the sector, with demand worries and short-term oversupply among the factors worrying investors,” Jonathan Butler, a precious metals strategist at Mitsubishi Corporation in London, said by phone. “Fund managers are losing patience with the metals. They don’t think there is going to be a lift in demand.”  

The collapse in platinum prices, down about 40% since the middle of last year, has become an existential threat to Lonmin, which sank to a record low for a second day on Tuesday. Investors fled the stock, pushing it down 27%, after the producer said it would sell billions of shares at a fraction of the market rate to try to restore its finances.

Platinum traded at $912.90 an ounce by 11:15am in London, according to Bloomberg generic pricing. Gold was at $1 093.55 an ounce, near a three-month low on signs interest rates will head higher in the US. Higher rates curb gold’s appeal as the metal doesn’t pay interest or dividends. Gold is down 7.7% this year, set for a third annual loss.

There’s a 66% probability the US will raise interest rates in December, up from 56% on November 11, the day before a strong jobs report, Fed-fund futures data show.

Gold assets in the biggest exchange-traded product backed by the metal fell on Monday to the lowest level in seven years. Holdings in the SPDR Gold Trust slid 0.4% to 666.11 metric tons, the least since September 2008, the month Lehman Brothers Holdings collapsed.

Spot silver slid 0.5%, declining for a ninth day, also the longest streak since September 2008, to $14.4977 an ounce and palladium climbed 2.4% to $613 an ounce.

©2015 Bloomberg News

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