This morning we are going to have a look at platinum, because it is still horribly undervalued and is historically extremely undervalued relative to gold, as we will see. In case you didn’t know, platinum is a Precious Metal and it is 30 times more rare than gold. If all the platinum ever mined were melted and poured into an Olympic-sized pool, the platinum would barely reach your ankles. Gold, however, would fill three pools. So in a world drowning in worthless paper money it is very clear that there is going to be a flight into all Precious Metals. This is already happening with gold and silver and it will soon spread to other metals, especially super rare platinum.
On its 20-year chart we can see that platinum has put in an awful performance since its 2008 peak. It got to over $2200 early in 2008 and is now trading at well under $1000 and if you take continuous inflation into account during all the intervening years, it is clear that in real terms it is now trading at a dismally low price. While it’s true that we have taken a freak peak at the top of a “stalagmite top” as our starting point we can see that essentially it has been in a gruelling bearmarket from that peak right through to the Covid Crash low in the Spring of 2020, when a deliberately orchestrated global mass psychosis saw many commodities such as oil “drop through the floor”. The Big Picture though is that it has been marking out a giant base pattern since 2015, a giant base pattern that can be classified as a Head-and-Shoulders bottom.
The 10-year chart enables us to more comfortably view the Head-and-Shoulders bottom and there are several interesting points to observe on this chart. The first is that the price is still relatively close to the band of strong support at the lower boundary of the pattern, roughly between $760 and $840 – as mentioned above the freak Covid Crash drop in the Spring of 2020 can and should be ignored. This means that it is still at a very good price as its anticipated major bullmarket hasn’t even started yet – and it hasn’t even started to start although we are seeing the first stirrings. The next related point is that it will break out this base patrern and really get moving once it has succeeded in breaking above the zone of resistance marking its upper boundary, which is roughly at $1300 - $1400. Lastly, although the Accumulation line is still rather weak, there has been a noticable buildup in volume in recent weeks which is believed to be the precursor to a rally.
Zooming in on recent action now via the 6-month chart we see that platinum has at last started to respond to gold and silver’s emerging bullmarket as it rose sharply about a week ago and it is encouraging to see that its 200-day moving average has already turned up so that if platinum now continues to advance or even if it only holds its ground, we should soon see a bullish cross of the moving averages which will set it up for a major new bullmarket.
Lastly, just to emphasize just how cheap platinum is here we will look at the 20-year chart of its price relative to the price of gold. This is a really rather astounding chart as it shows that platinum is at about one-fifth of its price relative to gold compared to where prices were back in the mid-2000’s and given that the downtrend channel shown that has been in force from 2010 is converging, it implies that we could see an upside breakout by platinum relative to gold before much longer that would lead to a long period of outperformance by platinum, and given also that we know where gold is headed, the gains made by platinum could be spectacular.
The conclusion must be that this is an excellent time to buy platinum and platinum related investments. So we will be on the lookout for better platinum stocks going forward.
Platinum spot price up 2.2% at $1,005 on the morning of 12th April 24.
Posted at 11.15 am EDT on 12th April 24.