With Friday’s announcement that it has developed an emission control catalyst that could cut in half the PGM loadings for gasoline-fueled cars, Nissan Motor Company has roiled the PGMs markets. Platinum dropped $43, while palladium dropped only $4. Investors should expect more fireworks as the market evaluates the impact of Nissan’s new catalytic converter.

At CMIGS, we have not been PGMs fans because while platinum and palladium are precious metals, they are industrial metals and have not been used as money. We believe the compelling reasons for own precious metals is to protect against currency debasement, and gold and silver have proven to be the ultimate hedges against inflation.

All things being equal, platinum and palladium would protect against currency debasement, but all things are not equal because of the huge demand for the PGMs that comes from the automobile industry, for use in catalytic converters specifically. Now, the Nissan announcement makes it extremely difficult to project future demand.

Mineweb.com has an article on Nissan’s announcement, with commentary on possible future impact on platinum and palladium demand.

By now probably everyone reading this has seen the news about the mid-air news helicopters’ collision that occurred in Phoenix today about 12:50 pm MST. The copters collided about a half-mile north of our offices, which are only stories below the height at which the collision occurred. We’re on the 14th floor. Several of our staff had a “bird’s eye” view of the horrific accident.

Mike had called Kelly, our office manager, into his office, asking why are those helicopters up there. Kelly watched the copters, and Mike’s attention was drawn to the street where many police cars, their sirens sounding, were involved in a car chase, which in recent years have become the rage with the TV media.

Kelly said one copter did a hard bank north and hit the other one solidly, maybe head-on, maybe in the side. There were at least four copters following the chase, circling for position to film.

I heard the collision, and immediately looked to the street, thinking it was a major auto accident. Then my eyes were drawn upward as the copters fell straight down behind a parking garage. A huge black smoke stack rose immediately.

Mike was talking on his cell phone as he watched the chase. His view of the collision was peripheral, but Kelly, whose husband is a pilot, watched the copters. There was no crash landing. The helicopters fell like rocks. Fred in shipping also witnessed the collision.

Our offices gave those watching a prefect view of the chase. The police had shot out the tires on the chased vehicle, which turned out to be a construction truck, which the driver ditched in a vacant lot only yards from an FBI building. The driver jumped in another construction truck, which, by happen stance, must have had keys in the ignition.

The second truck had a small cement mixer on the back; the chase headed east on a street one block north of our office building. That was when the collision happened, and no one in the office continued to watch the chase.

As this is written, the smoke has dissipated, the police guard the ditched truck, and the news is nationwide, probably worldwide. We can see that the truck’s tires on the passenger side are flat. The way the truck is sitting, the driver side tires may be flat also.

Obviously, no news copter continued with the chase, which ended miles west of the crash site. Mike tells me that the guy being chased can be criminally charged with the deaths of the newspersons in the copters. Not a good way to start a weekend.

Amazing! The Dow plummets 311 points (down 450 points at the day’s low) on continued bad news out of the housing sector, and gold falls $10.50, on top of yesterday’s $10.70 drop. Also blamed for the Dow’s decline: renewed concerns about the credit markets. Yesterday, Chrysler and Alliance Boots Plc failed to find buyers for $20 billion of loans to pay for their buyouts, said a Bloomberg report.

In addition to renewed concerns in the housing industry, now there’s the matter of availability of funds for corporate mergers, which fueled much of the stock market’s climb over the past two years. With stocks so high, you’d think the corporations would be selling stock for capital, but they prefer to borrow.

Meanwhile, US treasuries, considered the safest of all paper instruments, benefited from the stock decline as sellers moved their funds to the less volatile treasuries. The yield on benchmark 10-year Treasury notes fall as cash pours in.

Really, though, isn’t gold supposed to be the ultimate safe haven during times of financial uncertainty? Shouldn’t gold go up on such a huge stock decline? Ordinarily, the answer is yes, but not this time. Besides, we cannot describe the recent stock declines as anywhere near chaotic enough to send average investors into gold.

Stock investors have seen in recent years huge declines only to watch prices rebound shortly thereafter. For example, February 27 the Dow fell 417 points, but recaptured that loss in six weeks. From there, the Dow climbed steadily climbed until it topped 14,000 two weeks ago. With such a stellar performance, stock investors are not too concerned and moved to treasuries for temporary safety. If conditions worsen in stocks, however, we could see some of that flight money landing in gold.

Additionally, many investors are so confident stocks are headed higher, albeit corrections along the way, that they sell even gold to meet margin requirements and to take new stock positions. If stocks put in a prolonged decline, it will be a different matter.

Meanwhile, an analyst who has a good track record in predicting short-term prices in gold tells me that he sees the downside in gold being $650, which is only $12 off today’s close. We like gold and silver prices at these levels, believing that we are in a long-term secular precious metals bull market. In bull markets, buying the dips results in lower average costs over the long haul.

Rumblings of a strike in the South African mines are starting to circulate, and with them come expectations of higher gold prices. After all, South Africa is more identified with gold production than any other country. However, would a South African strike affect the price of gold as much as many gold bulls expect? And, is a strike a real possibility? Further, if there is a strike, how long will the workers stay out?

The primary issue between the workers and the mines is amount of the increase in wages. The South African Chamber of Mines, which represents the country’s mining companies, has offered an increase of about 7.5%. At the negotiations, NUM, the National Union of Mine Workers, is asking for 15%. In trying to rally public support, however, NUM talks about “double digit” increases. Since 10% increase would be “double digit,” there is a lot of room for compromise.

One might think that talk of a strike in the South African gold mines would send the price of gold higher. Historically, however, strikes in the mining sector have not seriously damaged South African gold production as the two parties usually come to agreements fairly quickly, often days before the strike deadline or days into a strike.

Additionally, the impact of a strike in South Africa would be more psychological than physical because SA, while still the world’s largest producer, no longer produces the lion’s share. According to the Gold Institute, SA produces 12% but Australia and the United States are nipping as SA’s heels at 10%, with Peru and China at 9% each, and Russia at 8%. Gone are the days (the 1970s) when South Africa produced more than 60% of the world’s gold.

Still, if there’s a SA strike, then the price of gold could rise. My guess, however, is that an agreement will be reached. If I’m wrong, then only 10% of the world’s gold production will be affected.

As for the price of gold going higher, geopolitical events or the US$ Index dropping through 79 is more likely than a prolonged shutdown of South African gold production. Before investing in gold, read our page on gold bullion investments.

When will gold go ballistic? asks Ambrose Evans-Pritchard in his blog for the UK’s Telegraph website.

Then he answers his own question:

Gold will fly once investors can see that neither of the two reserve currency pillars (euro and dollar) is on a sound foundation, and once the pair are engaged in a beggar-thy-neighbour devaluation contest to stave off a slump (if necessary with the use of Ben Bernanke’s helicopters, meaning mass purchase of Treasuries, mortgage bonds, stocks, or assets of any kind to support the markets). This would amount to a partial breakdown of the monetary system. Gold will not stop at $800. It might well go beyond $2,000.

Evans-Pritchard nails the real reason for owning gold: the dollar and the euro are paper currencies, and when the politicians begin printing in a big way (Isn’t the Fed already there with the dollar?) both currencies will decline, sending the price of gold skyward. $2,000 is not out of the question. In fact, $2,000 may be on the low side.