Gold has been the talk of the town recently, with everyone wondering if the current rally is a bubble waiting to pop or just the beginning of a run to much higher prices. While gold is getting the attention, its sister metals -- silver and platinum -- have actually been outperforming. Below we provide historical charts of the ratio between gold and silver and gold and platinum. When the line is rising, gold is outperforming, while gold is underperforming when the line is declining.

As shown, late last year both silver and platinum lost big ground to gold, with platinum and gold even reaching parity at one point. During the metals rally this year, however, silver and platinum have actually done better than gold. (See SLV and DBS for silver ETFs and PTM for a platinum ETF.)

This essay is based on the Premium Update posted November 6th, 2009

The recent huge purchase of gold by the Indian central bank triggered a substantial rally that took gold to new (nominal - !) highs gathered a lot of attention and generated a substantial rally. I’ve touched this subject in my previous essay, but since this topic is so popular, I would like to put additional comments this time, but from a different point of view. In the following essay I would like to comment on the negative impact that the future government sales may have on the price of gold. After all, that is a wide-known argument against investing in the precious metals. It is said that gold is not a good investment, because governments and central banks around the world will at some point flood the market with their gold reserves and thus cause a massive plunge in the price of gold and silver (correlated with gold).

Platinum is used in consumer and industrial products, including jewelry and industrial production. In fact, most platinum is used by the automotive industry in the production of catalytic converters. Therefore, compared to investing in gold, platinum can serve as a bet on the rebound in the auto industry. Platinum is more volatile than gold, so, generally speaking, platinum and silver are better investments than gold during periods of economic strength, while gold is safer play during times of turmoil and uncertainty.

This essay is based on the Premium Update posted October 30th, 2009

The U.S. Dollar, the currency which precious metals are priced in, is standing at a crossroads today. The possibility of breakout to the upside has grown in the past week, but the trend still remains down. So, what are the implications for the precious metals?

I am a gold bug, there is no question about that. I am also a long-term bear on the USD because I know that Washington will never reverse their fiscally irresponsible ways of the last 30+ years. However, I feel that gold has made a huge run in recent months and the USD has made a big move to the downside as well. This will not continue as stocks are beginning to struggle and earnings are not as good as many have expected.

This means that the dollar will more than likely see some strength in the short run, driving stocks and commodities lower. This will certainly drive gold below the $1,000 level which will bring about a much better buying opportunity for those looking to buy. Not to mention, other metals have largely been ignored in the recent run up in gold prices, i.e. silver, palladium and platinum are well below their 2008 highs.

This essay is based on the Premium Update posted October 23rd, 2009

The crude oil market has lost most of its popularity since it is no longer near $150 per barrel (no longer do oil-related topics dominate the main financial websites), but nonetheless I’m sure that nobody can deny crude oil’s importance in today’s globalized economy. It is vital for both businesses and individual consumers, as fuels are derived from it. Most of us need to drive and purchase goods that also need to be transported to us directly or indirectly.

London-based ETF Securities, one of the largest European ETF issuers, has filed the prospectus for what would be its third U.S.-listed ETF and the first physically-backed platinum ETF on the NYSE Arca Exchange. The ETFS Platinum Trust (PALL) will seek to reflect the performance of the price of physical palladium, offering a cost-effective and convenient way for investors to gain exposure to one of the world’s rarest metals.

Over half the world’s palladium use related to the manufacture of catalytic converters, which convert harmful gases from automobile exhaust into less harmful substances. As consumers and regulators have moved towards increasingly stringent emissions regulations from the U.S. automotive industry, demand for palladium and platinum, another metal found in converters, has soared.

By Julian Murdoch

Gold has scored a lot of press lately, and for good reason: Its price just keeps on making new records and breaking them. Just last week, the yellow metal recently struck a new all-time high of $1,072/oz.

This essay is based on the Premium Update posted October 16th, 2009

In one of the previous essays I’ve drawn Readers’ attention to the fact that gold has now decisively broken above the $1,000 level, and that this profound action has important implications for all gold and silver investors. I have received many e-mails from investors (for which I am thankful) and several of them asked about the price of gold in currencies other than gold. Therefore, this week I will provide you with analysis of gold with emphasis on its price in currencies other than U.S. Dollar.

Precious metals ETFs have become a popular investment choice for investors looking to establish an inflation hedge or seeking a safe haven in times of economic uncertainty. While these assets are generally concentrated in a handful of gold and silver funds, a number of ETFs and ETNs offering exposure to platinum, one of the “forgotten precious metals” have seen a surge in popularity as well. While not as widely-used as gold and silver, platinum can serve a number of purposes in investor portfolios, offering potential for both diversification benefits and enhanced returns.

Platinum is a dense, malleable, corrosion-resistant metal used in a wide variety of consumer and industrial products, including jewelry, laboratory equipment, dentistry equipment, and electrodes.

With oil's decline and natural gas' rise over the past few weeks, the ratio of oil to natural gas has declined quite a bit. As shown below, the oil/natural gas ratio hit a 20-year high recently as natural gas collapsed. The ratio is still very high compared to historical levels, but it is down from 27 to 17 since the start of the month.

The platinum to gold ratio has also begun to reverse the downtrend it had been in since early 2008. At the end of 2008, gold actually traded above the price of platinum, bringing the ratio below 1 for the first time in years. With the economy getting back on track, platinum has outperformed gold, and the ratio is back up to 1.28. This is still, however, far below the range that the ratio was trading in throughout most of this decade.

Gold's move above $1,000 earlier this month grabbed headlines, but its precious metal counterparts have been the real performers this year. As shown in the chart below, gold is up 14.2% year to date, while platinum is up 42.5% and silver is up 51.3%. For ETFs of these metals, see GLD for Gold, [[SLV] for Silver, and PTM for platinum.

Gold
The continued, short term strength of the dollar has seen gold’s safe haven and hedging attributes tested against the dollar today and the metal has slipped from $947/oz to $940/oz. However, these same attributes are coming to the fore against the sterling. As the UK braces itself for the worst jobless figures in 15 years and Mervyn King, the Governer of the Bank of England, is likely to ask people to temper their expectations about the economic recovery in his speech regarding inflation today, gold is up against sterling in early morning trading. The raft of economic measures introduced globally to combat recession may turn out to be built on sand and investors will increasingly look to the yellow metal as being a more solid investment to safeguard their wealth.

Silver
Silver is closely following the movements of gold at the moment and has slipped nearly 1% today to $14.16/oz.

By Brad Zigler

Real-time Monetary Inflation (per annum): 8.4%

Platinum has been on a roll recently. Unfortunately for bulls, it's been mostly downhill in June. The October NYMEX delivery topped out at $1,304 an ounce on June 4, then slid more than $140 before finding buying support last week.

click to enlarge

Above we highlight our trading range charts of gold, silver, platinum, and palladium. The green shading represents between 2 standard deviations above and below the commodity's 50-day moving average. As shown, all four of these precious metals are currently trading right in the middle of their trading ranges.

By Lara Crigger

6-Month Prices For Platinum And Palladium

Here are 3 commodity ETFs with a reasonable probability of gaining significant ground:

1. United States Natural Gas (UNG). Bespoke recently reported that United States Natural Gas (UNG) has seen a 77% increase in trading activity over the last 50 trading days. Marc Courtenay identified that the price of oil is trading at 19x that of natural gas at $3.7 a British Thermal Unit whereas history pegs the ratio at 10x. In other words, oil could pull back to $60 per barrel, and natural gas would need to jump 60% to reach the historical average.

Investors should sell platinum and buy palladium as platinum becomes expensive for industrial use. Approximtely 2/3 of the supply of platinum is used for industrial uses, primarily in car manufacturing (catalytic converters, spark plugs), high end electronic instruments, missiles, and jet engines. The rest of the supply is doled out for jewelry and held in ETFs for safe haven investments for investors. In the coming months supply restrictions, improving economic conditions and labor disputes will cause palladium to rise over the next year.

Since the drop in car manufacturing and the drop in world industrial demand last year, platinum went from over $2,000.00 an ounce to under $800.00 an ounce. Initially the price was above the $2K mark due to power supply restrictions from the South African government. South Africa’s electrical grid is still under capacity and new units won’t go online for at least 3 years, while in the meantime, world demand will pick back up.