Platinum Dip Is A Buying Opportunity

February 26, 2021 01:00 PM
Platinum has been the best performing precious metal over the past 4 months
Metals are already in the beginning of a major bull market
Platinum will be in much greater demand for manufacturing electric vehicles with hydrogen fuel cells
platinum

platinum

Platinum has been the best performing precious metal over the past 4 months. We have to pay attention to what’s going on in this market. Platinum has been beaten down versus gold for too long. I want to bring your attention back to November 9th, 2020. That was the low in platinum; that day it was $851.00 per ounce. 

The April gold low on that same day was $1,859.60 per ounce. The differential that day was $1,008, gold over platinum. Since then, platinum has rallied 63%! Today the differential is at $552. Platinum’s discount to gold is what made it so attractive to money managers and experienced commodity traders who recognized that platinum was severely undervalued at $1,000 under gold. But there’s more to platinum than a “proxy” for gold. 

Industrial demand has further fueled platinum’s rally. Its use in catalytic converters is widely known and demand for vehicles has increased, as signs of the economy’s growth cannot be ignored. More importantly is future demand for clean energy: hydrogen power. Hydrogen fuel cells for electric vehicles are the future and all the automakers are getting on board. Platinum will be in much greater demand for the manufacturing of those vehicles. 

Platinum is still a very good value at $1,200. Metals are already in the beginning of a major bull market. Inflation will be added support after we embrace the fact that interest rates are also rising. Metals are dipping right now because interest rates have risen too quickly. 

Platinum has been ignored for too long. Future demand will drive platinum back towards $2,000. It’s been there before; it won’t be that hard to get back.

April Platinum Daily Chart

 

April Gold Daily Chart

About the Author

Frank Cholly has 35 years of commodity industry experience. He spent 20 years on the CBOT trading floor.