I wouldn’t jump on this mania, but instead look at another opportunity. Because similar to palladium, now platinum is setting up for an ascending triangle pattern.
Because remember, the target of this rally is given below. Never buy higher than the height of the wedge.:
A very rare sight, physical platinum and palladium now has a negative premium in the Sprott trust. So you can buy platinum and palladium at a discount! This could indicate to a future drop in platinum and palladium.
A recent interview with David Morgan told us that platinum is far superior now than gold. He says that all of platinum is being produced in Africa, which we already know. But they are producing at costs higher than the price of platinum, which we already know too. He says that the platinum to gold ratio is below historic levels and is much more scarce than gold, which we already know as well.
So if you do own gold, sell it and put it in platinum. If you don’t believe me, believe David Morgan:
As an add-on from me though, I want to point out that platinum is being used by the automobile industry for car catalysts (around 60% of platinum is used for autocalayst in 2006). So it is important to look at car sales. And what do you know, 2012 was the best year for car sales since 2006. Ford is profiting!
The long awaited Sprott Physical Platinum and Palladium Trust IPO (SPPP) has finally come to exist, since we heard about it in February 2012. You can now subscribe to the 35 million units priced at $10/unit tradeable soon on the NYSE and TSX.
The physical Platinum/Palladium will be stored at the Royal Canadian Mint. You can bet that I will put some money in this trust if I have some spare money left as platinum is still very cheap as compared to gold.
More info at: http://www.sprottplatinumpalladium.com/
 |
| Chart 1: Platinum to Gold Ratio |
In an interview from Peter Schiff on 25-September-2012 with the CEO of Sandstorm Gold, Nolan Watson, I noticed that platinum production costs are now almost the same as the platinum price. This is very significant as every price drop in platinum will render platinum mines nonviable for business.
 |
| Figure 1: Price versus Operating Cost (Gold, Silver, Platinum, Palladium) |
Several articles like these have popped up recently and it’s almost certain that the platinum price will go up due to supply concerns. South African miners are very inefficient and their costs are rising rapidly due to inflation.
Nolan Watson told us that the price of gold hasn’t kept pace with rising inflation. This means that the gold price should already be at $2000/ounce just to be on par with the inflation as compared to 4 years ago. Basically this means that gold is now cheaper than 4 years ago if we count in inflation.
And platinum will be even better!
Just look at the platinum gold ratio (Chart 1). It is forming a bottom and should go higher, meaning higher prices of platinum versus gold.
I will be long platinum for the time being.
 |
| Chart 1: Platinum Gold Ratio |
These days, many commodity investors are living in uncertainty because they read on the internet that China, the largest consumer of commodities in the world, is slowing down. In this article I will take a look at the most important commodities consumed by China. We will see if our concern about China slowing down is validated.
China is already the world’s largest consumer of the main industrial metals copper, nickel and zinc. In the energy space, China is the largest consumer of coal in the world. In construction, China is the largest cement (+ ceramics and plate glass) consumer in the world. In the precious metals industry, China is the largest gold and platinum jewelry consumer in the world. Indeed, a slowdown of China will have a large impact on commodity prices.
In the full version of this article I will go through the commodities listed above and we will see that China is indeed slowing down.
In my previous article about platinum I pointed out it was time to trade gold for platinum. You would think that the time has come again to buy platinum, but I fear that the automobile industry is deteriorating again.
 |
| Chart 1: Platinum to Gold Ratio |
However, during Q1 of 2012 investment demand recovered by 63,000 troy ounces. So a turnaround in platinum is possible.
Today Goldmoney presented a nice chart about the relative performance of several commodities.
 |
| Performance year to date of commodities |
As I wrote an article about Platinum a few days ago, Goldmoney.com has its eyes on the Platinum price too:
You can find the article here:
Goldmoney’s article
Correlation Economics (Backup) 