Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
VR and Gaming Becomes the Metaverse - 7th Dec 21
How to Read Your Smart Meter - Economy 7, Day and Night Rate Readings SMETS2 EDF - 7th Dec 21
For Profit or for Loss: 4 Tips for Selling ASX Shares - 7th Dec 21
INTEL Bargain Teck Stocks Trading at 15.5% Discount Sale - 7th Dec 21
US Bonds Yield Curve is not currently an inflationist’s friend - 7th Dec 21
Omicron COVID Variant-Possible Strong Stock Market INDU & TRAN Rally - 7th Dec 21
The New Tech That Could Take Tesla To $2 Trillion - 7th Dec 21
S&P 500 – Is a 5% Correction Enough? - 6th Dec 21
Global Stock Markets It’s Do-Or-Die Time - 6th Dec 21
Hawks Triumph, Doves Lose, Gold Bulls Cry! - 6th Dec 21
How Stock Investors Can Cash in on President Biden’s new Climate Plan - 6th Dec 21
The Lithium Tech That Could Send The EV Boom Into Overdrive - 6th Dec 21
How Stagflation Effects Stocks - 5th Dec 21
Bitcoin FLASH CRASH! Cryptos Blood Bath as Exchanges Run Stops, An Early Christmas Present for Some? - 5th Dec 21
TESCO Pre Omicron Panic Christmas Decorations Festive Shop 2021 - 5th Dec 21
Dow Stock Market Trend Forecast Into Mid 2022 - 4th Dec 21
INVESTING LESSON - Give your Portfolio Some Breathing Space - 4th Dec 21
Don’t Get Yourself Into a Bull Trap With Gold - 4th Dec 21
GOLD HAS LOTS OF POTENTIAL DOWNSIDE - 4th Dec 21
4 Tips To Help You Take Better Care Of Your Personal Finances- 4th Dec 21
What Is A Golden Cross Pattern In Trading? - 4th Dec 21
Bitcoin Price TRIGGER for Accumulating Into Alt Coins for 2022 Price Explosion - Part 2 - 3rd Dec 21
Stock Market Major Turning Point Taking Place - 3rd Dec 21
The Masters of the Universe and Gold - 3rd Dec 21
This simple Stock Market mindset shift could help you make millions - 3rd Dec 21
Will the Glasgow Summit (COP26) Affect Energy Prices? - 3rd Dec 21
Peloton 35% CRASH a Lesson of What Happens When One Over Pays for a Loss Making Growth Stock - 1st Dec 21
Stock Market Sentiment Speaks: I Fear For Retirees For The Next 20 Years - 1st Dec 21 t
Will the Anointed Finanical Experts Get It Wrong Again? - 1st Dec 21
Main Differences Between the UK and Canadian Gaming Markets - 1st Dec 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

What Platinum Gold Ratio Major Breakout Signifies

Commodities / Platinum Feb 08, 2013 - 01:01 PM GMT

By: Jeb_Handwerger

Commodities

Platinum (PTM) is breaking out compared to gold (GLD) as South Africa, which supplies three quarters of world production, continues to struggle with labor issues and possible nationalization. Look for a major breakout of the platinum to gold ratio at 104. Platinum (PPLT) is about to break into new 52 week highs as demand increases due to the economic rebound in Asia, while at the same time supply is under major pressure. Observe the chart below which shows that the majority of production comes from questionable mining jurisdictions.


Top 10 Platinum and Palladium Producing Mines

The world's largest producer of platinum, Anglo American Platinum (AMS), reported a major loss for 2012 and warned of a potential supply shortfall as labor protests and nationalization fears continue to increase.

South Africa has become increasingly volatile and demand for platinum is picking up due to increased sales for new automobiles. A supply shortfall in platinum and potential price spike could happen in 2013 as a major deficit in PGM's could be developing.

Last fall during the beginning of the South African mining strikes I penned a bulletin on why platinum is providing investors a rare buying opportunity not seen in more than 25 years.

I also forecasted that platinum's discount to gold will not last long as we were in the beginning of a major rebound in the Far East and a risk on rally in housing (XHB) and financial (XLF) stocks.

This could boost inflationary forces for monetary metals such as platinum and silver (SLV) which also have a rising industrial use. When platinum and silver begins outperforming gold as it has been doing recently this may forecast that inflationary forces are beginning to take effect. This may also be bullish for the undervalued junior miners (GDXJ) who perform better during risk on cycles.

Platinum underperformed gold in 2011 and 2012 as a safe haven as a slowing economy and deflationary forces in Europe and the U.S. favored the yellow metal as a risk off investment vehicle.

However, that trend may be changing quickly as investors may be realizing that the Central Banks have used massive monetary weapons to fight deflation and that we are starting an inflationary cycle evidenced in the rebound in the most toxic sectors which the government has been bailing out since 2008.

The platinum to gold ratio is making a significant breakout as platinum's price moves above the price of gold. Investors who listened to our bullish report on platinum a few months ago realize that platinum's discount to gold was extremely unusual.

It happened before in 2008 and then back at the end of the year in 1996. Each time this represented a great buying opportunity as platinum supply is extremely tight and historically averages double the price of gold.

Of course in 2011 and 2012, the debt crisis in Europe and the U.S. led to a major safe haven rally where gold outperformed platinum and silver. I wrote a few months ago as soon as the strikes hit South Africa that we may be near the bottom.

Platinum production from South Africa and Russia has been declining since 2006

Remember over 90% of world platinum supply comes from Zimbabwe, Russia and South Africa. These are not mining friendly jurisdictions.

This pressure on supply from Africa combined with a robust recovery in China manufacturing may be the factor for the outperformance of platinum.

Remember the cost of mining platinum in South Africa is marginally profitable at these prices as the costs are quite expensive as South Africa has the deepest and most dangerous mines in the world.

The fundamentals for platinum appear to be stronger than that of gold as there is great potential for lower mine supply from South Africa in 2013.

In conclusion, the price of platinum may be turning higher. Do not be surprised for major miners to cut back on platinum investments in South Africa and look for additional secure supply in North America where there are undervalued opportunities.

Subscribe to my free newsletter to get up to the minute updates on rare earths, uranium, gold and silver.

By Jeb Handwerger

http://goldstocktrades.com

Disclosure: Author has no ownership of etf's mentioned and no business relationships with ETF companies.

© 2013 Copyright Jeb Handwerger - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Jeb Handwerger Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in