Platinum easily recovers everytime it tanks on gold and silver weakness | 19 Feb 2021


Platinum Price Forecast relative to Long Term Monthly - Medium Term Weekly - Short Term Daily - and Hourly (not shown) data.

PLATINUM FORECAST

(Previous week in brackets)

Platinum USD Monthly Weekly Daily
1270 (1247)
↑2%
PT Trend ↑ (↑) ↑ (↑) ↓ (↓)
PT % Risk
Weight
90 (90) 87 (84) 75 (89)
PM Distribution
Total allocation 50% (55%)
Pt:35% Ag:35% Au:30%

Platinum / USD live price



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Platinum comment

19 February 2021 close: Our timely entry into physical Platinum last year still looks solid reaching a new 5 year monthly high of 1337 just this past week. Between 1915 and 1920, Platinum prices soared from 2x gold to 5x gold before precious metals regulation put a stop to this steep divergence. The average gold/platinum ratio since August 1971 = 0.88. Having seen sub 0.40 in 2009 and 2.20 in 2020. We believe that precious metals are likely to survive the onslaught from crypto and will lead Platinum back to that more recent long term equilibrium of nearer 1.00 or slightly below. A favourfed slight overweight of Platinum in the substantial portfolio allocation of precious metals. We like to see long term bearish divergence in the medium term and long term time scales before considering an exit. Besides trading physical is relatively expensive and their is a storage cost of 0.5% per annum, depending on provider, to be considered. We use the Bitpanda exchange for Platinum and a Swiss provider for physical gold and Silver. Storage location for all metals is Switzerland.

12 February 2021 close: Whilst Gold and Silver suffered somewhat at the hands of traders switching from paper metals to crypto (see crypto blog), Platinum continued its expected strength with a highest weekly close in 6 years. Even though we see an hourly risk weight in overbought territory and daily turning down, the long term trend is still in full swing. We predict that the 1500 level will be triggered relatively soon as more people start to discover platinum as one of the more attractive and safe wealth preservation assets. Due to Pt advance in recent weeks relative to the other precious metals Gold and Silver, platinum share of in the overall physical metals allocation increased to 35%. No Change.


GOLD/PLATINUM Ratio Price Risk Charts & Analysis

(Previous week in brackets)

Gold Platinum ratio Monthly Weekly Daily
139 (149)
↓6.7%
Trend ↓ (↓) ↑ (↓) ↑ (↑)
% Risk
Weight
9 (9) 3 (3) 10 (6)
PM Distribution
Total allocation 50% (55%)
Pt:35% Ag:35% Au:30%

Gold/Platinum Ratio Charts

Daily Ratio 19 Feb

Major trends in important traditional asset classes can be identified by the simple observation that they are correcting from an outside trange price level into equilibrium. This is happening with Platinum and with Silver via a vis gold. 50 year equilibrium (1971-2021) is now at 0.88. Or AU at 1800 and PT at 2000.  The corrective move we now experience will need time to complete. The most likely scenario is for this ratio to sweep through the equilibrium before finding its speculative bottom.

 

 

 

 

Weekly Ratio 19 Feb

Weekly risk trend turned up at same level, which produce some upward price pressure, i.e gold to recover somewhat from its relative weakness in coming weeks. Considering all timescales, the ratio can expect further pressure as short versus long timescale bearish divergence will determine the medium term and long term future.  This is the kind of scenario that develops in nearly 100% of all fast moving markets.

Monthly Ratio 19 Feb

19/2: Monthly risk has dropped to 9%. This is low, but fast moving markets seeking their natural equilibrium may pause but not stop until such balanced price point has been achieved. Markets will typically shoot beyond those balance price points and experience some serious and increasing volatility in the process.  Only active traders with physical longs should trade or hedge with short term derivatives, but not more than 30% of the physical position. Leveraged portfolio's are outside of our risk management parameters.

12/2: Looking at the Gold/Platinum monthly chart we notice a strong price trend south and equivalent risk weight closing in on oversold. The chart also shows how past monthly risk weight levels, up or down, often took one year or more before the primary trend tops or bottoms out. We should expect the same. It is a strong trend and we have a substantial cushion to allow for any medium term reversal and a major extension towards and beyond the 1:1 ratio. At the present level of Gold, platinum has another $600 dollars to go and we expect to see that happening sooner rather than later due to a much more limited market liquidity in physical platinum.

Qrtly Ratio 19 Feb

19/2: Of course the interim figures are showing further decline and the current level is at 24%. This major downtrend of the Gold to Platinum ratio historically should take several more quarters before the shorter term timescales signal a potential bottom exit. The base wealth preservation position is a substantial 50% with a fairly evenly diversified precious metals portfolio where Platinum rates at 35%. If Pt moves substantially closer towards its 50 year equilibrium, the  Platinum share of total precious metals will increase and may need to be rebalanced to remove speculative risk.

12/2: Interim Quarterly risk weight closed the week of  8-12 Febr at 28 versus 37 last week. This rapidly dimishing risk weight is pretty common after  a market has lost 35% of its value from the March 2020 peak. The current ratio at 1.46 is still well above the average ratio price based on a quarterly close for the past 50 years. That average 200 quarter Gold/Platinum ratio is 0.88.  We have also seen Pt trade at a ratio of 0.5 on extension just like the totally unreal pump to 2.26 last March. 0.5 ratio means Platinum would need to gain another $2,400 relative to gold. It has happened before.


Daily Ratio 12 Feb

The Daily Gold/Platinum ratio risk weight dropped sharply again into a potential oversold condition as a result of the strong increase of the platinum price last week. This ratio market is not attractive to trade short term due to relatively high conversion margins in the physical market space. A temporary reversal may materialize, but we shall not attempt to maker changes to the present metals allocation until Long term Gold/Platinum risk weight indicators become clearer as to a more pertinent change of trend.

Weekly Ratio 12 Feb

Weekly Gold/Platinum ratio risk weight is in an oversold range, but the downtrend has been substantial enough to expect further weakness over a longer timescale. Yes we may see a weekly bullish divergence reversal and one that may quickly fail a more common risk weight analysis. Strongly trending markets like Platinum are known to extend often beyond target dates and prices. Platinum is also known to extend beyond the 1:1, hence better risk to hold Pt even if Gold starts to outperform Platinum for a few weeks or months.

Monthly Ratio 12 Feb

Looking at the Gold/Platinum monthly chart we notice a strong price trend south and equivalent risk weight closing in on oversold. The chart also shows how past monthly risk weight levels, up or down, often took one year or more before the primary trend tops or bottoms out. We should expect the same. It is a strong trend and we have a substantial cushion to allow for any medium term reversal and a major extension towards and beyond the 1:1 ratio. At the present level of Gold, platinum has another $600 dollars to go and we expect to see that happening sooner rather than later due to a much more limited market liquidity in physical platinum.

Qrtly Ratio 12 Feb

Interim Quarterly risk weight closed the week of  8-12 Febr at 28 versus 37 last week. This rapidly dimishing risk weight is pretty common after  a market has lost 35% of its value from the March 2020 peak. The current ratio at 1.46 is still well above the average ratio price based on a quarterly close for the past 50 years. That average 200 quarter Gold/Platinum ratio is 0.88.  We have also seen Pt trade at a ratio of 0.5 on extension just like the totally unreal pump to 2.26 last March. 0.5 ratio means Platinum would need to gain another $2,400 relative to gold. It has happened before.



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Posted in A - All Financial Blogs | 2021 Forecast, PLATINUM FORECAST 2021 | EYEFORGOLD.

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