uploads///Gold Platinum Ratio

How Is Platinum Performing in 2018 So Far?


May. 1 2018, Updated 5:40 p.m. ET

Platinum markets

Depressed platinum prices are a major concern for platinum miners in Africa. Their burning cash balances hasn’t yet led to a drop in supply despite the precious metal’s weak price performance. Africa is the source of ~60% of the world’s platinum.

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

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Platinum has fallen since the beginning of 2018. In this part of the series, we’ll focus on the gold-platinum spread, which compares the price performances of these two metals. When analyzing platinum markets, it’s essential to examine the metal’s performance compared to gold’s. As we know, gold is the most crucial of the four precious metals.

Spread reading

This spread measure has been on a roller-coaster ride over the past two years. It was trading at 1.5 on April 26, 2018. A ratio of 1.5 indicates that it takes 1.5 ounces of platinum to buy a single ounce of gold. The spread’s RSI (relative strength index) level is 48.8, suggesting a possible downward reversal in price.

The relative performances of gold and platinum can also be analyzed through gold- and platinum-based funds such as the Physical Platinum ETF (PPLT) and the iShares Gold Trust ETF (IAU). PPLT has fallen 2.9% over the last week, while IAU has fallen 2.2%

Key mining stocks that have been significantly affected by movements in precious metals lately are Pan American Silver (PAAS), Coeur Mining (CDE), Franco-Nevada (FNV), and Randgold Resources (GOLD).


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