It was a very good day for the metals yesterday, as they rose sharply in response to the dollar going into reverse after a sizable runup. A very significant development was that platinum broke out of its Head-and-Shoulders bottom on strong volume, a move which we had expected
that marks the start of a bullmarket. Copper, gold and silver also rose with silver having a particularly strong day, and although copper and silver have yet to break out of their Head-and-Shoulders bottom patterns, the breakout by platinum is a sign that they will follow suit and break out soon. We can see the breakout by platinum out of its fine Head-and-Shoulders bottom on its latest 6-month chart below.
An important point to make at this juncture is that platinum is VERY GOOD VALUE HERE.
Our very long-term chart showing the platinum price relative to gold, reveals that it has never been cheaper relative to gold. Gold will buy more than 3 times as much platinum as it did just over 10 years ago back in 2008. You have to go back as far as 1982 to find a time when platinum was almost as cheap relative to gold as it is now. What this means of course is that is that there is a high probability that platinum is going to outperform gold going forward, and so if gold is in a bullmarket, as expected, platinum should perform even better. Another potential big driver for the platinum price is that, because 70% of it is produced in South Africa, a country whose leaders are determined to make the place end up like Zimbabwe, there could be serious supply disruptions if anarchy prevails. Note the pronounced bullish Falling Wedge on the chart for platinum relative to gold, which strongly supports the contention that platinum is set to outperform.
Click on chart to popup a larger, clearer version.
We’ll end with a quick look at silver, where we see on its latest 6-month chart that although it didn’t break out of its Head-and-Shoulders bottom yesterday like platinum did, it had a big up day with a large white candle on strong volume, which is very bullish and a sign that it is getting ready to break out.
In a separate article we will be looking at a platinum stock whose assets are outside South Africa, that looks set to do very well as the platinum bullmarket becomes established.
End of update.
Posted at 8.05 am EDT on 2nd November 18.