With auto manufacturers accounting for 50% of annual platinum production, last weeks dismal news from car makers saw spot platinum at Fridays New York close down to $1656.50 an ounce after trading down to $1629 during the session.

General Motors announced a second quarter loss of over $15 billion, BMW issued a profit warning and Nissan fell short of its quarterly forecasts.

Spain saw a drop of 27.5% in July auto sales, while US and France also announced substantial drops in demand.

Expectations of continuing high prices for oil can only lower demand according to a Commerzbank analyst.

Lest we forget the BRIC nations, particularly China, are still expected to increase demand for imported as well as home manufactured vehicles as their growing middle classes aspire to western standards of living.

The longs are probably well on the way to be shaken out, output continues to fall, and stockpiles are being depleted.

We believe that a sharp reversal could be a strong possibility when normal service resumes after the holiday season ends but while the market is thin beware false signals.