uploads///Gold Platinum Ratio

How Platinum Is Moving Relative to Gold


Apr. 9 2018, Updated 3:55 p.m. ET

Short supply

Platinum and palladium are used to cut down carbon monoxide emissions and so are used as an autocatalyst in vehicle engines. Platinum is used in diesel-based generators while palladium is used for gasoline-based engines. The platinum market has been in short supply for the past few years. The deficit is expected to increase to a short supply of 275,000 ounces in 2018.

Since the beginning of 2018, platinum has increased 2.6%. In this part of the series, we’ll focus on the gold-platinum spread, which compares the price performance between these two metals. When analyzing platinum markets, it’s essential to compare the metal’s performance with gold, which is the most crucial of the four precious metals.

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Spread reading

This spread measure has been on a roller coaster ride over the past two years. It was trading at 1.45 on April 5. A ratio of 1.4 indicates that it takes 1.4 ounces of platinum to buy a single ounce of gold. The RSI level for the spread is 81.2, suggesting a possible downward reversal in prices.

The comparative performance of gold and platinum can also be analyzed through gold- and platinum-based funds such as the Physical Platinum (PPLT) and SPDR Gold Shares (GLD) ETFs. PPLT posted a 1.9% gain on a year-to-date basis.

The key mining stocks that have been significantly affected by movements in precious metals lately are Pan American Silver (PAAS), Yamana Gold (AUY), Gold Fields (GFI), and AngloGold Ashanti (AU).


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