"When misguided public opinion honors what is despicable and despises what is honorable, punishes virtue and rewards vice, encourages what is harmful and discourages what is useful, applauds falsehood and smothers truth under indifference or insult, a nation turns its back on progress and can be restored only by the terrible lessons of catastrophe." … Frederic Bastiat

Evil talks about tolerance only when it’s weak. When it gains the upper hand, its vanity always requires the destruction of the good and the innocent, because the example of good and innocent lives is an ongoing witness against it. So it always has been. So it always will be. And America has no special immunity to becoming an enemy of its own founding beliefs about human freedom, human dignity, the limited power of the state, and the sovereignty of God. – Archbishop Chaput


Wednesday, February 22, 2012

Platinum regaining Ground against Gold

There seems to be a type of stealth bull market in the platinum group as the metal begins moving up and regaining lost ground against the price of gold. The metal has been grinding higher since the beginning of the year and is currently up nearly $400 since then but has mostly gone unnoticed by the financial press.

It is unusual to see the metal trading at a discount to the gold price. Apparently some of the hedge funds have taken notice and are moving into platinum especially as news filters out of a strike in a large South African mine owned by Impala.

Platinum, while often viewed as a precious metal, is greatly affected by economic news due to the fact that it is also an industrial metal used largely in the automotive exhaust systems. Obviously any news that is considered bearish for overall global growth tends to depress its price. Conversely, a growing global economy in which consumers worldwide opt to buy new cars, is bullish for the metal.

As such, platinum has been greatly impacted by the risk off or risk on trades. Notice how it responded to the QE I and QEII programs with the former beginning in late 2008 and the latter kicking back in during 2010. Then look at what happened to it in late 2011 when investors were watching European woes proliferating with what seemed like not much of a Central Bank response at the time.

That all changed at the beginning of 2012. Near zero interest rates and the expectation that the Central Banks would be keeping this environment intact for the foreseeable future have now combined with supply related issues and are driving the metal higher with strong showings the last two sessions in particular and the first two months of this year.


  1. Palladium and Gold have underperformed relative to platinum and silver. Look for them to makeup ground - especially since palladium is a great substitute for platinum in many of the industrial applications.

    But yes, the runnup has been stellar. If you want to get in on the party late - I would think palladium offers the better risk/reward.

    On another note - the blame game of the "evil speculators" has officially begun. LOL.


  2. willydog - these same ignoramuses who are constantly blaming speculators for high gasoline prices should at least have the common decency to publicly thank them and fawn all over them when they are pounding away at the short side of a critical market such as gasoline or crude oil which they did back in the summer of 2008. Short selling from speculators works wonders in the natural gas market of late and yet we have yet to hear a single congratulatory word to them for making nat gas energy so inexpensive.

    What can I say - this generation is the product of an education system which fails to "educate" most of the people who are unfortunate enough to have passed through it. It's always easy and mentally lazy to scapegoat someone else instead of engaging in a discussion which requires a lot of factual information and a basic understanding of supply and demand.


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