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Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

Rhodium Opportunity to Diversify Gold and Silver Portfolio When Prices Seem Inflated

Commodities / Rhodium Nov 16, 2010 - 10:48 AM GMT

By: Ned_W_Schmidt

Commodities

Best Financial Markets Analysis ArticleRHODIUM TRADING THOUGHTS is about  timely and profitable trading of precious metals. We do not believe every turn in the market can be called. Our goal is that our recommendations should be profitable.  Profits are the goals, not trades. Do not expect all recommendations to be profitable. No system can achieve that lofty goal. Our goal is simply to state whether conditions for a metal are favorable or not.


Buy signals are issued when appropriate. These signals are generally speaking for day they are issued. If price remains below signal price, buying can be done. Do Not Buy signals are given when market is over bought, and buying is unwise. Blue triangles indicate an over bought condition. These would not be good times to buy, so they are labeled Do Not Buy. Software is not showing complete legend, for some reason.
 

Rhodium offers an opportunity to diversify a portfolio of precious metals when Gold and Silver prices seem inflated. Rh is far rarer than either, and information is difficult to get on the metal. That latter condition is what we call information inefficiency in markets. It offers opportunities for investors that will spend a little more time digging, and a little less time following popular ideologues.

In the top chart is $Rh / $Gold. When the line of gray circles is declining  the price of Rh is under performing $Gold. That line ceased falling in September. That condition suggests that $Gold had become over priced relative to Rh. Or, Rh was under priced relative to Gold.

In the second chart is plotted the price of $Rh and intermediate oscillator. We are only interested at this time in buy signals. After the last signal Rh seemed to gain a little more enthusiasm. Would seem reasonable to conclude that the consolidation from the April high has been completed.

Rh seems to be poised to move higher given the under valuation of the metal in both an absolute sense and relative to $Gold. With Gold’s price currently a risky situation and with Silver price an extremely high risk situation, considering Rh as a diversification move seem appropriate.

OPINION:
Given the continued under valuation of Rh relative to Au, which is in a dangerous parabolic formation, investors may want to consider diversification of their precious metals portfolios by adding Rh. We do want to note that we are not projecting an imminent move upward of incredible size that will allow you to retire before the start of the new year, but that over time Rh should rise in value without the volatility of Gold or Silver.

$Rh Preliminary Price Valuation Range

Rh Current

Valuation

$Valuation

Potential % Change

$2,390

Over

$7,500

214%

$2,390

Fair

$6,000

151%

$2,390

Under

$4,500

88%

By Ned W Schmidt CFA, CEBS

GOLD THOUGHTS come from Ned W. Schmidt,CFA,CEBS as part of a joyous mission to save investors from the financial abyss of paper assets. He is publisher of The Value View Gold Report, monthly, and Trading Thoughts, about weekly. To receive these reports, go to www.valueviewgoldreport.com

Copyright © 2010 Ned W. Schmidt - All Rights Reserved

Ned W Schmidt Archive

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


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