Saturday , 15 June 2024

Platinum is Downright "Cheap" Relative to ALL Other Precious Metals! Have You Any in Your Portfolio?

If this precious metals bull market continues over the next couple of years, I think one would [be well served to] diversify some assets in gold/silver into platinum. [Let me explain the present relationship between platinum, gold, silver and palladium and why I make the aforementioned recommendation.] Words: 832

So says Willem Weytjens (  in edited excerpts from his original article*.

Lorimer Wilson, editor of (Your Key to Making Money!) and (A site for sore eyes and inquisitive minds) has further edited ([ ]), abridged (…) and reformatted the article below for the sake of clarity and brevity to ensure a fast and easy read. The author’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article. Please note that this paragraph must be included in any article re-posting to avoid copyright infringement.

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Weytjens goes on to say, in part:

Platinum:Gold Ratio

Since 1972, platinum has traded at about 1.35 times the price of Gold on average. Right now, however, platinum is even cheaper than gold, trading at only 0.92 times the price of Gold. This is a rather “rare” situation as it only happened in the early 80′s and for a short time in 1974. In 1972, 2000 and 2008 it even traded as much as 2.30 times the price of Gold (monthly basis). Based on this ratio over the last 40 years, we can say that Platinum is “cheap” relative to Gold.

Platinum:Silver Ratio

Over the last 40 years, platinum traded at about 76 times the price of silver (monthly average). Right now, it is trading at [approx. 50] times the price of silver, far below the historical average ratio. In 2003, it even traded as high as 150 times the price of silver. In 1979 however, it traded as little as 20 times the price of silver, but that was rather an “exception”, as silver jumped from $6/oz to $48.70/oz, as the Hunt Brothers tried to corner the silver market. Taking out this exception from the chart below, I think it’s fair to say that platinum is also cheap compared to silver:

Platinum:Palladium Ratio

Over the last 40 years, the average platinum-to-palladium ratio was 3.17. Right now, it is 2.53. In 2001 however, it was a low as 0.60  because of rumours that the Russian stockpile of alladium was almost depleted. Leaving this “exception” of 2001 aside, I think it’s fair to say platinum is cheap relative to palladium, based on this ratio of the last 40 years:

Gold:Silver Ratio

Many argue that the gold-to-silver ratio is headed back to 15, a level not seen since 1979. However, as explained above, this move in silver was rather “exceptional”, as the Hunt Brothers tried to corner the market. When we look at the historical average of the gold-to-silver ratio over the last 40 years, we can see that the ratio now [54.3], is just slightly below the monthly average of the last 40 years (56.42). This means Gold is not cheap, nor expensive compared to Silver.

When we look at the daily gold-to-silver ratio going back to 1920, we can see that the daily average [54.3] doesn’t differ that much from the monthly average of the last 40 years (56.42). This tells me that 55:1 is a good estimate of the average gold-to-silver ratio.

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In the chart below, we can see that gold was expensive compared to silver when the gold-to-silver ratio was higher than 80, and that silver was expensive to gold when the ratio dropped below 30′ish. In April earlier this year, the ratio dropped towards 30, meaning silver was getting expensive relative to gold, and has now reversed sharply, back towards its 90 years average.


Based on the charts in this article, we can conclude that:

  • Platinum appears to be cheap relative to Gold
  • Platinum appears to be cheap relative to Silver
  • Platinum appears to be cheap relative to Palladium
  • Platinum thus appears cheap relative to the other Precious Metal discussed in this article.
[That being said,] when the precious metals bull market comes to an end, it is very well possible (and even likely) that platinum will drop along with other precious metals. However, if this precious metals bull market continues over the next couple of years, I think one would do well by diversifying some of his/her assets in gold/silver into platinum. One way to trade this ratio would be to buy platinum and short gold. By doing this, the investor reduces the exposure to “precious metals” (as the historical correlation between gold and platinum has been fairly high over time, so if gold goes down, platinum usually goes down, and if gold goes up, platinum usually goes up as well).

However, when looking at the gold:platinum ratio, we could expect platinum to outperform gold in the future. It could be that both gold and platinum go down, but then we could expect gold to go down more than platinum. If both gold and platinum keep grinding higher, we could expect platinum to rise more than gold…


Related Articles:

1. Where Do Gold & Silver Rank in Vulnerability to a Recession Among Other Commodities?


A Barclays Capital research [report] notes that gold prices are vulnerable to a recession – more so than some of the other commodities. In the last recession of 2008, gold prices appreciated the least among precious metals. Below is a table that ranks 30 different commodities. Words: 571

2. Gold Bullion: What’s the Difference Between 1 Troy Ounce and 1 Regular Ounce?


You have no doubt read countless articles on the price of gold costing x dollars per “troy ounce” or perhaps just x dollars per “ounce” but the difference between the two measurements is significant. For that matter, what’s the difference between a 24 karat gold ring and an 18 karat gold ring? What’s the difference between a .75 and a 1.0 carat diamond? Let me explain. Words: 963

3. Platinum:Gold Ratio Suggests Platinum Will Do Even Better Than Gold in the Future

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These days there’s so much interest in gold and silver it can be easy to forget that there are a number of other precious metals out there that investors should be considering for their portfolios. While gold and silver should form the core of any metals portfolio, there’s at least one other metal that merits serious attention and that is platinum. [Let me explain why.] Words: 493