Decade-Long Look At Gold/Platinum Spread

Includes: GLD, PGM, PPLT, PTM
by: Emerging Money

By Tim Seymour

A decade-long look at the gold vs. platinum spread has the reversion to mean telling us it's going lower. Gold continues to be sold against platinum, which is seeing solid industrial demand and supply deficits.

The Trade

I sold more gold against long platinum. This trade is arguably in the early innings of a reversion to the long-term mean.

  • Gold is at least 20% away from the recent 0.80 level, which was the trend before the European Union's crisis-driven gold spike
  • 10-year average gold/platinum = 0.69, currently at 0.96
  • Platinum is seeing industrial use and supply deficit
  • Gold is a European Union crisis tool and an inflation tool, and I don't see either right now