(Bloomberg) -- This year’s best-performing major metal could have further to run, but investors may want to cash in right now.
That’s the advice of Goldman Sachs Group Inc (NYSE:GS). analysts including Mikhail Sprogis and Sabine Schels, who said they’re advising clients to pocket gains from bullish bets on the metal used in auto pollution-control devices. Goldman’s April recommendation that investors “go tactically long the palladium vs platinum ratio’’ has translated into an 18% profit, they said.
Palladium futures in New York have surged by almost a third this year, the most among major metals, amid concerns over persistent supply shortfalls. The commodity also “continues to benefit from tighter vehicle emission standards globally,” particularly in China, Goldman said.
“Relative speculative positions on the Comex, which used to be massively skewed in platinum’s favor, have reversed with palladium’s specs increasing somewhat, while platinum speculative net length has come down significantly,” the analysts said in a report Wednesday. “With the tactical case having played out we close the trade.”
Hedge funds and other large speculators have added to their bullish position in U.S. palladium futures and options contracts for seven straight weeks, the longest stretch in almost six years, Commodity Futures Trading Commission data showed on Monday.
Based on spot prices of the metals, an ounce of palladium bought about 1.9 ounces of platinum on Wednesday, up from about 1.6 on April 25th, when Goldman made the recommendation.
