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February 11, 2013 - Why Do You Think Platinum Prices Have Been Rising? by Elliott Wave International
Forget gold for a minute. The real scene stealer in metals of late has been platinum. No, I'm not talking about the widespread controversy surrounding the proposed minting of a $1 Trillion platinum coin to avert another debt crisis.
I'm talking about the powerful uptrend in platinum, which has taken prices to their highest level in 16 months.
The popular belief among mainstream analysts is that platinum's rally got started in mid-January 2013. That's when the world's largest platinum mining company -- Anglo American PLC (AmPlat) -- announced plans to cut annual output by 20% -- thus sparking fears of a supply shortage and driving investors into the market.
If memory recalls, however, this isn't the first time that global platinum production has been threatened. Back in mid-2011, platinum prices stood at their loftiest level in three years.
And according to the usual experts, there was one main cause of the metal's surge: A series of worker strikes and demonstrations erupted throughout South Africa's biggest platinum mines and caused regular disruptions to output. Here, one news source at the time explains the seeming bullish implications of the situation:
"With lingering supply worries, the upward trend is very much intact for the metal. The demand is there. I think $2000 seems to be the next target." (Associated Press)
Rather than reaching its $2000 target, however, platinum prices turned down in a guttural 20%-plus sell-off to two-year lows before hitting bottom in Jan. 2012.
This single example sends a very powerful message: there is no consistent correlation between supply disruptions and rising prices. External threats to production are not always bullish, because people's perception of those threats is constantly changing.
As for an objective take on platinum's recent rally, you have to know one thing first: platinum's winning streak got started long BEFORE AmPlats Jan. 15 restructuring announcement. Point of fact, the recent uptrend in platinum has been in full swing since late Dec. 2012.
And, on Dec. 27, EWI's Metals Specialty Service editor Mike Drakulich set the stage for a very dramatic move to the upside in platinum. There, in his daily analysis of platinum, Mike presented a special bonus video with this powerful bullish message:
"I am on final bottom alert. If this forecast is correct, we should soon begin a thrust or a third wave rally... I think we're there. I think the risk-reward here is excellent. I think if we have a sustained rally above the 1550 level that will be an initial bullish indication. The higher 50-day moving average is right around the 1590-1600 level, if we can get above there on a close, I think we're in take-off mode."
Since then -- and not since the just-released AmPlats shutdown -- platinum has been stealing the metals show.
This brings us squarely to Mike Drakulich's current outlook for platinum: his Metals Specialty Service's daily analysis has something for everyone:
A brand-new video that lays the course of the most probable Elliott wave count underway at this time.
Written analysis that reveals critical support and resistence levels for maintaining a high-confidence trade set up.
And, a labeled price chart of platinum prices versus a Relative Strength Index (RSI) since mid-2011.
Don't come in on platinum after the best moves have already occurred.