Tuesday, 20 September 2011

The platinum:gold ratio a sign of credit crunch #2? 2011-09-20 1858 BST UK time

Here is a great chart. This is the chart of the platinum:gold ratio from stockcharts.com. Recently, the ratio has dipped below 1.0, a rare and remarkable thing for recent years.

I have been wondering whether it would be a good idea to swap some gold for platinum but here in the UK there is a prohibitive VAT tax on platinum of 20%, isn't that outrageous? That tax is on most things by the way; oh, the boundless greed of government!

I just listened to a super interview with Rick Rule on King World News, where he gives his always interesting view of the markets. This time he gives some time to platinum.

I decided to pull the $PLAT:$GOLD chart up again on stockcharts during his interview and lo and behold, the ratio is making a double bottom as I write at a ratio of about 0.97!

The first low was in the credit crunch of 2008 and we are right back at that low again, making an almost perfect double bottom. There has been a very slight bounce but it would be fascinating to see whether the ratio makes a double bottom and rallies or is it breaks down on this current Greek and Eurozone credit distress below 0.97 and plunges to a new low.

At any rate, one might therefore think of the gold to platinum ratio (that way around) as acting like a credit spread; this ratio is making a double top, or maybe it is about to break above 1.03 to a new high. Bob Hoye of Institutional Advisors and Howe Street radio talks of the gold:silver ratio acting like a credit sptread. I am gonna ask him if he thinks the gold:platinum ratio is similar.

Here is the gold:platinum ratio chart (the inverse of the one above).

No comments: