Platinum and Palladium Outperforms Gold and Silver



Platinum and palladium rose

Although gold and silver saw a down day on Tuesday, March 1, platinum and palladium were buoyed due to an increase in the overall market sentiments extended from the release of economic data. Platinum and palladium gained 0.26% and 4.4%, respectively, on Tuesday. Platinum and palladium closed at the marks of $936.70 and $517.40 per ounce, respectively.

Over the past five days, palladium has been the best-performing precious metal as it has gained a whopping 6.1%. The rest of the precious metals have been retreating during that timeframe. The price changes in platinum and palladium can be tracked by the Physical Platinum Shares ETF (PPLT) and the Physical Palladium Shares ETF (PALL).

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Moving averages

The rise in platinum and palladium, alongside the increase in market sentiment, confirms that these two metals reacted more as industrial metals than as precious metals.

The investments in platinum and palladium can be tracked from the investment in spreads like the gold-platinum spread and the gold-palladium spread. These two spreads are trading at 1.3 and 2.5, respectively. The spread measures the number of platinum or palladium ounces it takes to buy a single ounce of gold.

The trading price of these two spreads is at a considerable premium over the 100-day moving averages, which signifies a possible mean reversion. The lowering of the spreads would indicate that platinum and palladium should gain strength as compared to gold.

The changes in the precious metals can also be studied by examining investments in mining-based stocks like Barrick Gold (ABX), GoldCorp (GG), and Newmont Mining (NEM). These three companies make up 17.6% of the price changes in the VanEck Vectors Gold Miners ETF (GDX).


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