Platinum - who's buying?

[vand]

At current Pt/Silver ratio of 57, Pt would be expected to outperform Silver by about 1.5%pa over 5 years and 3.5%pa over 10 years, although the correlation factor is a bit weaker (ie there is less certainty) than it is for both Pt vs Gold and Silver vs Gold.

[vand]

TLDR version:

based on historical performance plotted against current valuations against each other

Pt > Silver > Gold

- Pt is expected to outperform gold by most, and with the highest degree of certainty

- Silver is expected to outperform gold also, but by a smaller margin than Pt and with slightly less degree of certainty

- Pt is expected to outperform Silver by a similar margin as Silver is to gold, but with slightly less certainty

 

 

[Lowlow]

Good stuff vand, thanks for the research.

[bluemoon]

Interesting info. I wonder how something like diamonds are looking in all this!

[vand]

Frisby's at it again:

https://moneyweek.com/495885/silver-and-platinum-are-both-very-cheap-how-long-can-that-last/

[Lowlow]

[dicker]

On 26/09/2018 at 15:53, bluemoon said:

Interesting info. I wonder how something like diamonds are looking in all this!

I think diamonds are the biggest confidence trick we know.  They are not rare.

[vand]

You can't value diamonds this way because they are not a homogenous commodity. gold is gold, but no two diamonds are alike given their weight, purity, cut etc.

The value of a 2g diamond is, like for like, more than twice the value of 2 1g diamonds (or however the hell you yardstick them). That is why gold is money, and diamonds are jewellery.

[vand]

Platinum has broken the downtrend and completed an important reversal pattern:

[vand]

As coincidence would have it, it is just over 10 years ago that Platinum was hitting its all time highs, the Pt/gold ratio was around 0.45 (ie you could buy over 2oz of gold for 1oz of platinum). We can now see these points on the 10 year return scatterchart to see what the predicted outcome was vs real outcome:

 

We see the actual 10yr performance in the right hand column...

Month

Platinum

Gold

Pt/Gold Ratio

10 yr Relative Performance %

Feb-08	2150	924.283	0.42989907	-10.8%
Mar-08	2040	971.055	0.476007353	-10.4%
Apr-08	1929	911.6	0.472576464	-10.6%
May-08	2008	889.125	0.442791335	-11.1%
Jun-08	2064	889.536	0.430976744	-11.5%

 

Based on previous data we would have predicted return return of between -6.5% and -7.5%

 

[vand]

An absolute steal at 1.55 pt/au, right now. 12%-14% pa 10 year outperformance  expected from these prices relative to gold.

[vand]

http://www.moneyandtrading.com/blog/2018/9/14/platinum-the-worlds-most-precious-metal-jerry-robinson-and-tom-cloud

[vand]

Finally got around to Platinum:Palladium analysis:

 

Here is the long term Pt:Pld ratio:

 

 

Pt/Pld vs 5 yr performance scatter plot:

 

 

Pt/Pld vs 10yr performance scatter plot:

 

[vand]

Platinum is approaching a historic undervaluation against Palladium. When this has happened historically, Pt has then gone on to outperform Palladium by a large margin over following 5-10 years as the cycle turned.

From the scatterplots, you can see that Platinum has not failed to outperform Palladium over 5 years any time the ratio was below 1.95, and did not fail to outperform over the following 10 years whenever the  ratio was below 2.6!

It may seem difficult to believe possible given the fortunes of both metals in the last few years, but at the current ratio of about 0.63, I fully expect Platinum to at least double or triple its value against Palladium over a next 5-10 year timeframe.

Also worthy of note is that unlike the more familiar Gold/Silver ratio, there is no clear long term trend in the Pt/Pld ratio that favours either metal, so it is entirely reasonable to expect a move back towards the old highs some point in the future.

 

[RogerBelmar]

I’m a gold and silver stacker but became intrigued by platinum when someone mentioned how all the gold in the world would fit into an Olympic swimming pool but platinum by comparison would fit into just one room.

[vand]

Here is the Pt/Pld ratio again, showing how long the major trend in each direction has lasted. This move in favour of Pld has now become very extended. Hard to be precise in these things, but it wouldn't surprise me if we are within a month or two of the very bottom.

[KevinFlynn]

I am late to the party, if I may?

I will definitely be buying to express my excitement. I admit this was new to me, last time I actively checked platinum it was a good deal more expensive than gold. I needed two months of getting back into precious metals to realize the switch that had taken place.

So platinum is more of an industrial metal like silver. I only now realized that. I will stack both and see which is gaining a percentage faster. My bet is on platinum.

[vand]

On 17/12/2018 at 17:52, KevinFlynn said:

I am late to the party, if I may?

I will definitely be buying to express my excitement. I admit this was new to me, last time I actively checked platinum it was a good deal more expensive than gold. I needed two months of getting back into precious metals to realize the switch that had taken place.

So platinum is more of an industrial metal like silver. I only now realized that. I will stack both and see which is gaining a percentage faster. My bet is on platinum.

 

You're not late to the party at all. On the contrary, your interest in Pt is impeccably timed, as you can see from the ratios that Pt is at historic undervaluation compared to the other precious metals, never mind other asset classes.

I have to say that I am hugely bullish on Pt and as confident as I can possibly be that Pt will see at least means reversion back to the historic mean of about 2.8 - 3.0 for Pt/Pd at some point in the next 10 years, which would be means a 5-fold rise for Pt vs Pd.

History shows that the ratio moves from one extreme to the other as reliably and regularly as clockwork. There is nothing at all to thing that this cycle will not continue. 

History also shows that when the turn does come, it has always been a large violent move in the price of the ratio. People who have not studied the historic relation will be amazed at how quickly the price of these metals will swap around. 

[vand]

On 06/10/2018 at 21:48, dicker said:

I think diamonds are the biggest confidence trick we know.  They are not rare.

 

Did you know they can make synthetic diamonds nowadays? I wonder how many "casual" people buying diamonds in rings etc probably don't realise they are probably getting something that was made in a lab.

 

[dicker]

Indeed!  I say to people that they may as well buy lab grown for peanuts rather than buy from a dealer / jeweller. (This mostly applies to corundum - I know less about synthetic diamonds). 

Best

dicker

[Uksilverstackers]

European Mint now have in stock Platinum Unicorn. They also have Dragon at same price.

Reminder to self - check when is next group buy?....

Platinum Queens Beast Unicorn

[flim]

who give the better buy back price for platinum ?

[scipio27]

thank you @vand great analysis. Also as I mentioned in another thread, platinum likely to have it's supply cut due to turmoil in SA, likely help it's price up.

[vand]

Next bubble: short palladium and long platinum.

https://www.ft.com/content/53aaef7c-a299-3899-b1d9-472d443b6ac5

 

I don't really think Palladium is a true bubble. I just think it's at a different phase of its own cycle. If you carefully study the price history of palladium you will see that it very often out of cycle with the other precious metals, and is even often counter-cyclical.

[flim]

Palladium is higher than gold again, this consistency does not just happened in a bubble 

there is a short squeeze in Palladium