Platinum decisively breaks a 12 year downtrend | 4 December 2020
Platinum 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)
|PT Trend||↑ (↑)||↑ (↑)||↓ (↑)|
|Pt % Risk
|76 (71)||74 (54)||92 (93)|
Total allocation 55% (50%)
4 December close:: Platinum vs USDollar had one of its better weeks in history rallying a full 12% during the week and finishing 10% higher against dollar making up 7% versus gold. Platinum also closed above our 1037 target which is significant and opening a new short term interim target of 1155 and a medium term target range of 1400-1600. Risk weight is still trending very positive in the Medium term Weekly and Longh term monthly time frames. Daily is getting overbought, which is normal after this strong 4 week performance and any short term reaction typically leads to bullish divergence between short and long term. Confidence that our opportunity trade in Platinum is indeed a quality risk. No change.
27 November:: Platinum hasn't peaked yet technically and the relative performance to Gold and Silver was some 7%. Platinum/USD ended the week stronger (961) than the previous week (943) whilst gold dropped nearly $100. We increased our platinum allocation by a full 5% of total portfolio expecting platinum to reach that one to one equilibrium in due course. It does look a little toppish but the experience with contrarian price behavior like this supports our longer term outlook. The additional 5% allocation means the portfolio distribution has now put Platinum on a par with Gold at 30% each with silver at 40% of total PM.
GOLD/PLATINUM Ratio Price Risk Analysis
(Previous week in brackets)
4 December:: Check our freshly updated charts below.
|Gold Platinum ratio||LT-M||MT-W||ST-D|
|Trend||↓ (↓)||↓ (↓)||↑ (↑)|
|34 (50)||0 (8)||0 (1)|
Total allocation 55% (50%)
Gold / Platinum Ratio Charts
Daily Ratio as at 4/12/20
As both Daily and Weekly risk weight are in max oversold range, the Gold Platinum ratio which has dropped over 20% in 5 weeks is likely to either pause or retrace during the coming week in oder to build for another drop towards 1.50. November 1st started at Gold = 2.21 x Platinum. Dec 4 closed at 1.7412. The move is fully in line with our forecast tht Platinum is on its way to equilibrium which is close to 1:1 Gold. The size of the recent downward move in a short period and after strong technical evidence is such that it allows for a patient hold during a likely correction period. History learns that a correction is likely to develop bearish divergence whilst Monthly and Quarterly risk weight are the hard drivers of this long term correction.
Arguably, more speculative type investors could make a temporary switch into Gold or Silver for maybe 50%b of the Pt holding, but only if is weighs against cost of trading. For long term investors and wealth preservationists who are mainly in hard asset physical precious metals this is not a good option yet. No Change otherwise.
Weekly Ratio as at 4/12/20
Weekly now reached rock bottom risk weight after another 5% drop in the Gold Platinum ratio. A pause or correction is likely to set up this market for another strong move in favour of Platinum and a first bullish divergence in the weekly time frame. Markets that move strongly in one direction are known to continue in overdrive until it stops. Only very short term technical tools, like hourly and 10 minute time frames can be used to play these final moves. Same applies to the stock market where long ter indicators have continued to show warnings whilst short term indicators keep signalling mild divergences follwing which these markets continued their uptrends. This is a high(er) risk play and against our style of maximising opportunity. Yes, risk is very low but the Platinum market is less liquid and one needs to be very careful bottom picking. Hence staying with the ratio longer term in favor of Platinum.
Monthly Ratio as at 4/12/20
Monthly risk has now dropped to 34 but still strongly down. The rapid move down started at just 70 after massive bearish divergence largely favoring an investment in Platinum some three months ago. Our current balance Precious metals diversification favors the hold on Platinum to rally towards the price of Gold.
Qrtly Ratio as at 4/12/20
Quarterly risk weight is strongly down with some way to go. This quarterly tool indicates that this major turn and shift we have been waiting for should drive the Gold Platinum ratio back to a more familiar 1 to 1 equilibrium, not being suprised if it overtakes gold by a serious margin in due course. Our recent increase into less liquid physical Platinum precious metal allocation should be the lower risk investment.
27 November comment:
Daily Ratio as at 27/11/20
Daily Risk turned down again in serious oversold condition We could expect a pause in the down trend either caused by a correction of PT following Gold downward or Gold recovering from its recent weakness. It doesn't change our longer term outlook. The 7% drop in the Gold/Platinum Ratio last week indicates a genuine and technically deserved appetite for the metal
Weekly Ratio as at 27/11/20
Weekly risk is still strongly trending down nearing an intermediary oversold condition. The strong Long term (Qrtly and Mntly) Gold Platinum ratio downtrend is most likely to determine a continuation of that trend for several quarters
Monthly Ratio as at 27/11/20
Monthly risk weight has now established a very strong downtrend and is leading the overall trend even if we see a few short term and medium oversold pauses along this ride. Mon rthly is also supported by a strong major quarterly downtrend.
Qrtly Ratio as at 27/11/20
Q3 marked a strong bearish divergence in risk weight Quarterly risk weight at 77. Now at a neutral 50 and strongly trending down. As we notice during various strongly trending periods since the 1970's even the quarterly risk weight can move substantially with price in just a few years or less. The most likely scenario is to see bullish divergence dvelop in quarterly risk after an interim correction sometime during 2021 and a new price low into 2022. If Platinum behaves as it has done during the past 50 years a ratio of nearer 0.50 is a real possibility in several years time. In today's market that means Platinum/USD at 3700 with the same Gold/USD price at 1850. Or Gold/oz = 5,000 and Pt/oz = 10,000.