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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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Katchum's Macro-economic blog
  • Platinum: Automotive Demand Dropping, Investment Demand Growing 0 comments
    May 26, 2012 2:19 AM | about stocks: PPLT

    In my previous article about platinum I pointed out it was time to trade gold for platinum. You would think that the time has come again to buy platinum, but I fear that the automobile industry is deteriorating again.

    Rhodium prices keep falling and I already said that this means that this indicates that demand for vehicles in the automotive industry is dropping. The correlation between rhodium and the automotive industry was discussed in this article.

    If we look at the platinum to gold ratio (Chart 1) we see that the trend is going down. It is now at a platinum/gold ratio of 0.9. Historically platinum should be more expensive as gold but these days people are fleeing out of industrial commodities and into the safe asset of gold.

    Chart 1: Platinum to Gold Ratio
    However, during Q1 of 2012 investment demand recovered by 63,000 troy ounces. So a turnaround in platinum is possible because platinum is still seen as a tangible asset like gold.
    Stocks: PPLT
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