November 26, 2008

Has Anyone Noticed That Price Of Gold And Platinum Is The Same?

For the first time in history, the price of gold and platinum are almost exactly the same.  Think about that.  This has never happened before, ever. 

Put another way: you have some gold, and you can trade it in for the same weight in platinum.

I don't know if that's bearish for gold (it goes to $500) or superbullish for platinum (back to $1580) but it is clearly a situation which cannot last.  Plan accordingly.

gold and platinum.JPG
Platinum has almost always been at least double the price of gold, or at least $400 higher.  Fewer catalytic converters?  Russian releasing their reserves? 





Comments

Perhaps a <a href="http://u... (Below threshold)

November 26, 2008 12:19 PM | Posted by terry north: | Reply

Perhaps a third option? I'm not sure how far to trust Austrian economics, but it does seem to make quite a bit of sense.

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Buy gold and short platinum... (Below threshold)

November 26, 2008 3:04 PM | Posted by k: | Reply

Buy gold and short platinum. If it makes fundamental sense for platinum to be more valuable than gold, that paired trade will make you money no matter where gold and platinum end up on an absolute level.

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the decline in the auto mar... (Below threshold)

November 26, 2008 10:12 PM | Posted by charlie h0tel: | Reply

the decline in the auto market is at least partly responsible.

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Has anyone noticed that pri... (Below threshold)

November 26, 2008 11:49 PM | Posted by robotslave: | Reply

Has anyone noticed that prices of all industrial metals have crashed in the second half of 2008?

Has anyone noticed that Platinum is primarily an industrial metal, while Gold is not?

No?

(No. That wouldn't merit a blog post.)

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No, it would merit one, ... (Below threshold)

November 27, 2008 2:45 PM | Posted, in reply to robotslave's comment, by Alone: | Reply

No, it would merit one, if it were the point I was going for-- industrial metals have fallen, but not as much as platinum. I'm not suggesting a conspiracy, I'm pointing out that this has never happened before and neither will it last. For example, let's say this is entirely due to decreased demand for platinum (say, catalytic converters.) And platinum falls even further. Then gold is overpriced, it's going to fall also. Or, platinum has overcorrected, and will bounce-- so platinum will rise. Either way, the trade is long plat short gold. I'm not comfortable shorting gold here, I think it goes up, so I think long plat is the better move. So, I'm on record: long plat (and long gold.)

Here's an analogy: You have no idea what metals cost, and you're buying a wedding band, you want gold. The jeweler says, look, I can make it platinum, no extra charge. You agree, obviously, but you look at him suspiciously: what kind of a scam is going on here? Do you figure that the price of platinum is really cheap, or do you figure the price of gold is too expensive? Now, plan accordingly.

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Yeah, if only this were ... (Below threshold)

November 27, 2008 3:02 PM | Posted, in reply to charlie h0tel's comment, by Alone: | Reply

Yeah, if only this were true. While they meet in Washington asking for a bailout

"GM grew its sales in Russia by 44 percent in the period from January to September 2008, outpacing industry growth of 23 percent and reaching a record total of 256,765. GM's market share has reached a new high of 10.9 percent in Russia from 6.5 percent as recently as 2006. In the first nine months of the year, Chevrolet maintained its position as Russia's favorite non-domestic brand with sales up 33.5 percent (or 44,000 cars and SUVs) to a total of 175,800."

Russia accounts for 35% of Chevrolet's total sales.

Even as US production declined in 2007 by 5%, worldwide (including U.S. numbers) increased 6%. Excluding China, which is about equal, U.S. production is 5 to ten times greater than anywhere else. Despite that, the world still produced 6% more cars in 2007. I don't know what's up for 2008, probably less cars, obviously, but I doubt it's enough to affect platinum that much.

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One should also take into a... (Below threshold)

November 28, 2008 12:04 PM | Posted by Rich: | Reply

One should also take into account that platinum is not available in exchange traded form and therefore would have to pay a significant mark-up in price to own the platinum. There is also the hassle of physically storing a precious metal (I doubt you will want to keep bars of platinum in your desk drawer).

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I keep hearing people say t... (Below threshold)

December 16, 2008 3:48 AM | Posted by Anonymous: | Reply

I keep hearing people say there is no etf for platinum. Whats this?
phpt
http://finance.google.com/finance?client=ig&q=LON:PHPT

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And this would be a good ti... (Below threshold)

April 26, 2010 10:06 PM | Posted by Best online poker room: | Reply

And this would be a good time to stock up in platinum. This is a really rare occurrence and in which entrepreneurs should take advantage of. However, I seriously doubt anyone would likely sell any part of their platinum depositories, especially with its decreased price.

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