In recent months there has been a near paradigm shift in the precious metals market that goes against basic market analysis of supply and demand. I'm referring to the recent change in which gold became higher than platinum. This shift occurred during last October and since then has proceeded with no clear end in sight.
Currently, gold is near $1,728, and platinum is at $1,608 per ounce, i.e. gold is nearly 7.5% more expansive than platinum.
During July/August the linear correlation changed direction and sharply fell to -0.5, i.e. a strong negative correlation between gold and platinum. This change came during the sharp rally of precious metals, when the uncertainty vis-à-vis the U.S. economy soared; this was stem, in part, due to the debate over raising the debt ceiling, and the announcement of S&P to downgrade U.S.'s credit rating. During that time when gold soared, platinum didn't react to this news in the same way and only slightly increased.
Will this change in which gold is more expansive than platinum will continue? For the time being, it seems that the answer is yes, but once the gold bubble will burst (probably in 2013), we should see a reverse in this direction and gold will become cheaper than platinum as it once was.
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