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Albert Sung is the author of the Katchum Macro-Economic Blog, monitoring breaking economic news from a day to day basis. He started investing in 2008 because of the economic crisis and holds a masters degree in chemical engineering. Previously, he worked several years as a process engineer at... More
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  • If You Own Gold, Sell It And Buy Platinum! 10 comments
    Jan 5, 2013 5:16 AM | about stocks: SPPP, PHYS, GLD, PPLT

    A recent interview with David Morgan told us that platinum is far superior now than gold. He says that all of platinum is being produced in Africa, which we already know. But they are producing at costs higher than the price of platinum, which we already know too. He says that the platinum to gold ratio is below historic levels and is much more scarce than gold, which we already know as well.

    So if you do own gold, sell it and put it in platinum. If you don't believe me, believe David Morgan:

    www.youtube.com/watch?v=1KiuBQLbqno

    As an add-on from me though, I want to point out that platinum is being used by the automobile industry for car catalysts (around 60% of platinum is used for autocalayst in 2006). So it is important to look at car sales. And what do you know, 2012 was the best year for car sales since 2006. Ford is profiting!

    Stocks: SPPP, PHYS, GLD, PPLT
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  • DAG Investments
    , contributor
    Comments (4132) | Send Message
     
    I lost a good bit of money by too hastily buying into the platinum story a few years ago. Once I dug deeper into the subject, I found that most industrial uses for platinum (including automotive catalytic converters) have actually been replaced by cheaper palladium and/or alloys. As a result, increased car sales no longer directly translate to increased platinum use/value.

     

    A quote from the article below, which is almost four years old: "Palladium is already a full-on substitute for platinum in petrol auto catalysts, but still only a partial substitute in diesel auto catalysts."
    http://bit.ly/VHb80I

     

    Additionally, some metals experts believe that the historical relationship between gold and platinum has permanently decoupled. I would do some more reading on that as well before diving in too fast. That is not to say that platinum will completely go away, but one might be very cautious about assuming that it will always hold the place in the world that it once did (remember coal?).
    6 Jan 2013, 04:07 AM Reply Like
  • Katchum
    , contributor
    Comments (601) | Send Message
     
    Author’s reply » I thought coal was going to be the most used commodity in China? Demand is going to increase and will be the primary energy source, more than oil.

     

    If platinum is going to go to palladium, then maybe Eric Sprott's SPPP is a good idea to buy because they have both.
    6 Jan 2013, 04:26 AM Reply Like
  • DAG Investments
    , contributor
    Comments (4132) | Send Message
     
    Yes, China uses a lot of coal, but that simply can't make up for when the entire world used coal only. The conclusion I came to is that the US coal industry will never again be what it once was. That has gradually become true over the past decade, as plants closed and weaker companies went bankrupt, and I believe that trend will continue, although the worst of it is probably over and there will probably only be some industry consolidation from here.

     

    Personally, I decided that I didn't want to own platinum or palladium. Cars last a lot longer than they use to, better/cheaper alloys are created all the time, electric cars probably don't even need cat converters, etc. The conclusion I came to when I decided to sell off my PPLT shares is that I do much better by simply buying dividend stocks when they're undervalued ... so far, that approach has been spot on.
    6 Jan 2013, 04:57 AM Reply Like
  • Katchum
    , contributor
    Comments (601) | Send Message
     
    Author’s reply » Dividend stocks are indeed a good choice. Personally I don't think the electric car industry will be strong, because oil prices are still very cheap.
    6 Jan 2013, 09:58 AM Reply Like
  • DAG Investments
    , contributor
    Comments (4132) | Send Message
     
    I don't think the electric car industry will be strong either ... but I do think there will either be some other prevailing alternative or a combination of enough alternatives to make the future significantly different from the past. For example, if electric cars eventually replace only 20% of the cars on the road and combustion engine cars last 40% longer than they did twenty years ago, the combined impact could be enough to make the automotive industry use of either metal insignificant and the automotive industry is currently the largest user. Since those things have already been in process for some years now, I think we're actually seeing the effects on the metals prices already ... it's just very gradual. I try to look at my investments from a long time horizon perspective and, even though I can't know what the specific changes will be, I believe the auto industry will be very different 20 years from now.
    6 Jan 2013, 12:45 PM Reply Like
  • Fizby
    , contributor
    Comment (1) | Send Message
     
    I am a physical gold owner. I'm increasingly concerned about confiscation. What are some of your thoughts?
    13 Jan 2013, 06:30 PM Reply Like
  • Katchum
    , contributor
    Comments (601) | Send Message
     
    Author’s reply » They won't confiscate platinum, buy platinum!
    14 Jan 2013, 11:34 AM Reply Like
  • mgj4891
    , contributor
    Comments (21) | Send Message
     
    I thought palladium was a derivative out of platinum.And that the rarity in earth is about the same.Like you find copper,gold silver with platinum and palladium in certain areas.Each must be chemically disolved from one another. Correct me if I'm wrong.
    19 Apr 2013, 11:21 AM Reply Like
  • wrongemail
    , contributor
    Comments (11) | Send Message
     
    Depends on the amount of money you have weather you could consider buying the metals.Then there is your age. Then there is your countries geo political situation.
    Here goes my thoughts. I'm 64. I remember the 70s well. I read many charts in those days but knew less than I do today.Anyone comparing today to the 60s and 70s are just not telling you anything of which you can judge your buying and selling with.Their explanation of the charts are crude if not manipulative.Gold price was down to 250 in year 2000 or something. The extreme opposite of that value would be if the gold price were at 10,000 today.Hard to beleive huh! Its even worse when you factor in the derivative games and bond market. Bonds are unable to sell today. In essence all that is left is stocks and derivatives holding them up.A few stocks are what would be considered worth holding . The rest are heading for the floor over time maybe not a long time. Buying bonds would be totally insane if your young say under 40.If your old with a lot of money they would be safe if you can stand watching what they will do over 30 years tell you get your principal back. Speculating in options or hedge funds is a sure looser against big banks and politics. That leaves 2 places left. Cash and gold and other monatary type metals. Housing depending.In a socialist environment housing is like joining the slave trade.Safe maybe unless freedom takes the reins. Just like cars houses can be built a lot cheaper. Not allowed today.Those who have paid their houses off still have a tax bill subject to political winds of whoever. Government and the unions who vote them in probably along with some assholes.If freedom takes over the ones with paid off homes will be rich in spirit maybe not in cash though.I don't know.If you have today a pension and 2500 a month you think you can rely on forever, a paid off house of or no house,a couple hundred grand in the bank or stashed I would go half and half on gold and the cash until death do us under.Trade in and out when you have to, never worrying about price.say from the age 30 something to 50. The other age groups if they are educated in the fine art of theft by generational change can afford to play it by ear a little more. You will learn as you go along. Fail and succeed. That is what we all do.Baring a nuec exchange you'll make it.Today debt rules.Tomorrow it may not.
    3 Feb 2014, 08:53 AM Reply Like
  • wrongemail
    , contributor
    Comments (11) | Send Message
     
    Here is what I mean by looking at charts.There is a 30 year double top in gold at 850 or so.1980-2009.Close to that anyway. In 1980 interest rates were at 15%-20% depending long and short not far from each other. The dow at 800 in 1980==15000 or something in 2009 or 8 whenever the top was.Rates at5% and crashing to nothing from 2008 till now. So you don't see why a person collecting 1200 in SS is bummed without a pension?LOL. Here we here DEFLATION with a debt 3 times of GDP.LOL. Bonds are stuck in dodo.Stocks depending on what your thinking about are worse than DODO. Now the top 10% obviously have no worries.YET.Just one more war like Vietnam will shoot the messenger in the mouth. So I think the double top at a 30 year span apart in gold is a resistance to the first leg of the new bull market in gold. 2009 the line stretches to.800 to 1900 is 1100.Half of that 550 from 1900 is 1350. We hit 1170 something and the dow is at 16000? lol. With the charts zipping around with all this money in just a few hands it is quite hard to believe that there is no inflation with crude oil around 100 average. average for crude during the 30 year was 25. Food meats, bullshit items on your extras on cars,trucks Vans.Electronic gadgets meant to moniter your citizens and now legal marijuana and no juice from the drug trade.
    You have to be kidding me.The dollar is just a toilet tissue waiting for you to grab it and wipe out. You know I suppose you guys will save this joke and put it on Utube. I have seen many jokes on Utube about the present situation. Survivalist,Martial lawists ,Excuseist galore,Blameists==the list is long.
    So i figure gold and cash is the only thing left for mediocre poor people with a little stash and nothing is left for the downright addicted addicts living from payday to payday. Depending on your age of course. For me at 64 I wish I had that 200,000 BUT NO.
    But I can still pretend.with what I do have.Keep monitoring the sillies and hope for luck in other endeavors besides stocks and bonds.
    Good LUCK
    3 Feb 2014, 03:36 PM Reply Like
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