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Interesting Gold vs Platinum

|Includes: SPDR Gold Trust ETF (GLD)

GOLD/PLAT - Platinum briefly fell below the $1,500 an ounce mark for the first time in six weeks, with the price of the precious metal relative to gold falling to its lowest level in 26 years - Platinum has traditionally been priced higher than gold as it is rarer, and since 1985, every time it has dropped below parity it has witnessed a sharp reversal within weeks. However, since breaching parity in late August, the platinum/gold ratio has been declining steadily –

 

Is Platinum – Gold spread (White) lead the S&P? (Orange)  I hope not

 

One of factors behind platinum’s weakness is that the marginal cost of production – which usually provides a floor for the price – has declined due to the recent fall in the rand. When prices fall below the cost of production, this usually forces producers with higher costs to cut or stop output, hence reducing supply - But with 75 per cent of global supply coming out of South Africa, the rand’s decline has meant that the cost of production has also fallen - Continuing concerns about the eurozone crisis and talk of a potential recession in Europe has also depressed platinum, which is used in catalyst converters for diesel cars, popular in the region