Platinum / Gold Ratio

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 |  Includes: GLD, IAU, PGM, PLAC, PLTM, PPLT, SGOL
by: Bespoke Investment Group

With more ties to the economy because of its use in various manufacturing components, platinum has been outperforming gold throughout the recovery. Platinum got hit during the April/May/June market downturn, while gold remained relatively stable. Since July, however, platinum has moved up into overbought territory while gold is closer to oversold levels.

click to enlarge

Click to enlarge

During the '08 market crash, the ratio of platinum to gold got below one -- meaning gold was trading at a higher price than platinum. As shown in the chart below, this hadn't happened since the mid-90s, and a ratio between 1.5 and 2.4 was a more typical reading over the last decade or so. The ratio has been trending higher throughout the current bull market, however.

If you think the economy is set up for a period of expansion, platinum is a better bet, as the ratio will likely creep back up to levels closer to 2. If you're worried about the economy, gold is the better bet.

Click to enlarge