Over a million ounces of platinum have been lost to the South African mining strike, which is now entering its 20th week. The strike is one of the longest and costliest in recent history. It’s an ugly situation, for sure.
Estimates suggest that a global shortfall of 1.22 million ounces now exists. As you can imagine, platinum prices have pushed vertical to $1,727 an ounce. Platinum, the most precious of metals, now enjoys the widest spread to gold prices ($88.85) since August 2011.
At some point, the strike will end. Especially since the government is putting pressure on both sides to settle. So be ready, because there’s a pot o’ gold sitting at the end of this strike. In fact, this is one of the easiest profit plays I’ve seen in the last five years.
Hint: What’s the one thing in the world that can’t exist without platinum? The answer? Fuel cells.
The fuel cell industry was cruising along prior to the strike.With virtually no fanfare, it was among the top-performing niche industries in the market, as shown by the NASDAQ OMX Fuel Cell Total Return Index (GRNFUELX).
Then the mining strike hit, and the bottom fell out of the rally (like a falling piano). Platinum, you see, is critical to the production of fuel cells. In fact, the properties in platinum that fuel cells depend on can’t be replaced by any other resource on Earth.
Platinum helps generate power through the electrochemical reaction of oxygen and hydrogen. The unavoidable reality is that higher platinum prices will hit fuel cell manufacturers where it hurts most – their bottom lines.
Companies like Ballard Power (NASDAQ:BLDP), ITM Power (LONDON:ITM), Hydrogenics (NASDAQ:HYGS), Quantum Fuel Systems Technologies Worldwide (NASDAQ:QTWW), FuelCell Energy (NASDAQ:FCEL) and AFC Energy (LONDON:AFEN) have all experienced dramatic declines in their share prices.
Before the strike, these companies were the darlings of the stock market. So what do you think is going to happen when the miners get back to mining? Exactly!