Gold, Silver and Platinum – Game on | 14 August, 2020
Gold Price Forecast relative to
Long Term Monthly (LT-M) – Medium Term Weekly (MT-W) – Short Term Daily (ST-D) – and Hourly (not shown) data
(Previous week in brackets)
|Au Trend||↓ (↑)||↓ (↓)||↓ (↓)|
|Au % Risk
|93 (96)||87 (94)||37 (93)|
|PT Trend||↑ (↑)||↓ (↑)||↑ (↓)|
|Pt % Risk
|65 (65)||78 (82)||52 (80)|
|Allocation||Pt:40% Au:60% (Total 100%)|
Gold/USD live price
Platinum has behaved more as we expected with a much shallower correction and the Gold/Platinum ratio moving in favor of the PT metal. We expect Platinum to reach $2,000 relatively quickly, catching up with par to gold and also benefitting from increased demand on less market liquidity. No Change.
7 August:: Any Nation’s money printing its deficit problems away cannot be a proud Nation. Zimbabwe is again facing 1000% annual inflation by the end of 2020 and maybe sooner. Who’s next? This is why a re-alignment of major currencies and hard assets will be the only option left.
On Friday August 7 we have increased our total precious metals allocation (Gold, Silver Platinum) from approx 30% of total assets to 40% (The new 100% allocation) though a further purchase of Platinum at around 965. The reason is that we trust PM better than our banking system and the PM rally is of historic proportion. We expected the start of the secular bull market as it found a major bottom at the end of 2015 and informally went long Gold and Silver in October 2018. The PM strong price acceleration in recent weeks confirms a wider acceptance and proof of a real safehaven proposition. Mainstreet hasn’t yet begun to realize what is going on.
WHY BUY PLATINUM IN 2020?
Let’s look at the risk numbers for the Gold/Platinum ratio in all time frames
Gold/Platinum ratio Quarterly (1972-2020)
The Gold/Platinum ratio always fell as Gold moved up, meaning Platinum would get relatively strong as a consequence. Except since 2014 as Gold paused trying to find its bottom and Platinum continued to show weakness for strong fundamental beliefs and sheer lack of demand. However on every occasion since 1971 the Gold to Platinum ratio always followed a bearish or bullish divergence risk to price scenario. Platinum has been 2x as expensive as gold and Gold recvently was nearly 2.5x as expensive as Platinum. The current picture is extremely bearish which leads us to believe that Platinum could easily double in price and possible shoot into an extension with a 200 to 300% price rally from the present level of between $900 and $1000, hence a minimum objective of $2000+
Gold/Platinum ratio Monthly (1996-2020)
The monthly time frame is no different with a massive bearish risk to ratio divergence screaming for a strong rally in the Platinum price.
Gold/Platinum ratio Weekly (2015-2020)
The weekly is interesting as it clearly showed bearish divergence in the ratio=1.60 range wheras Platinum showed a very similar destructive price action as Silver in March 2020. The Gold/Platinum ratio quickly rallied towards 2.40 just as the Gold/Silver ratio did towards 125. In Elliott terms we would call this March 2020 peak action an irregular top. On this Medium term time frame alone we expect this ratio to drop back towards the mid 2019 or 1.40 Gold/Platinum ratio bottom.
Gold/Platinum ratio Daily (2019-2020)
The Daily timeframe shows the Gold/Platinum ratio with perpetual bearishness since the March peak at 2.47.
Arguably we could even expect Platinum to strongly outperform Silver, although the Silver price is now showing the kind of elevation that must be taken very seriously. This is the time where holding physical Gold, Platinum and Silver OUTSIDE of your residential jurisdiction is absolutely key.
From experience we would expect platinum to benefit more strongly as demand volumes will increase beyond regular supply. This is likely to generate a major catchup towards equilibrium to par with gold, i.e. at least a 100% increase in the price of platinum between now and possibly as early as the end of 2020. This is an opportunity trade lead by technical indicators and not supported by fundamental considerations, which considerations typically lag behind price movement. In our opinion PT is as good as AU and it is always better to buy when no one wants it.
As far as outright Gold and Platinum, there is no change to our earlier view on Gold or Platinum as we haven’t yet seen the MT and LT price to risk weight divergence in gold necessary to begin considering a long term price top. Our total position in precious metals has increased away from Bank deposit with most weight on Silver. Silver 60%, Gold 25% and Platinum 15%.
Platinum/USD live price
(Previous week in brackets)
|Trend||↑ (↑)||↓ (↓)||↑ (↓)|
|80 (82)||85 (90)||54 (93)|
Silver/USD live price
7 August:: Silver decisively broke minor resistance at around 26.00 and without hesitation rallying strongly into a new price high for the year at 29.85 before settling in a 1 dollar intra-day range. The point now is that Medium and Long term Risk weight is making new highs without early signs of bearish divergence. This usually precedes consolidation with short term timeframes developing bullish divergence vis a vis longer term time frames. Hourly vs Daily, Daily vs Weekly and Weekly vs Monthly where the Medium term Weekly generally plays a pivotal role in terms of timing. We would expect volatility on price reactions but No Change to our overweight silver position holding.
GOLD/SILVER Ratio Price Risk Analysis
(Previous week in brackets)
|Trend||↓ (↓)||↑ (↑)||↓ (↑)|
|25 (38)||9 (7)||25 (28)|
|Allocation||50/50 AU/AG (50/50 AU/AG)|
Gold/Silver Ratio live price
The GOLD SILVER Ratio has already made an incredible recovery towards our equilibrium and has not finished as this primary trend also requires Longer term risk weight to start showing proper exhaustion based on bullish divergence. We remain equally bullish for Silver and Gold with some actual, speculative, overweight in Silver. This position requires patience in order to reap the rewards later on. Gold, in a wealth preservation consideration, should always be a critical holding in a precious metals allocation. No Change.
7 August:: Last week, the Gold/Silver ratio briefly dropped below 70 at 69.30 before settling at 71.75 onn Friday. That is a faster than expected nearly 15% drop from the previous week into our initial target of 60-65. As Only if we reach thi starget with clear bullish risk to price divergence in the MT Weekly time frame we may consider some switching between silver and Gold and/or Platinum. No Change for now.