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Platinum cheaper than gold?


RareAGstrikes

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I feel silver's undervalued, but if it was really as undervalued as some say demand would've outstripped supply along time ago.

Today platinum and silver are really in the same ball park, gold's the only real money in today's world as it has no counter party risk.

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There is no simple relation between the rarity of a commodity and its price. This is why it is nonsense when you hear people say that the gold/silver price ratio should be 9 because that is the ratio of production. Price is set at the margin where supply intersects with demand. Mineral water is abundant but expensive, because people are willing to pay for it; panda dung is rare but very cheap, because nobody wants it. More generally, the price of two commodities can only be expected to move in a definite ratio if they share the same marginal pattern of supply and demand. Gold and platinum are produced in similar ways, by mining, but mining companies cannot simply choose to switch over from producing one to the other because of a change in demand. Gold and platinum are also consumed in different ways: platinum is mostly an industrial metal, while gold is mostly in demand for jewelry and bullion.

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