Platinum is on The Verge of a Breakout

posted in: Gold, Platinum | 0

Platinum has historically traded at a significant premium to gold, however, recently this relationship has been flipped upside down with gold trading $250/oz above platinum:


Platinum (dark) vs. Gold (gold) since 1998


A bottom has formed in platinum during the last 8 months – a breakout above resistance near $1025 would target a move up to at least $1200:



Platinum has begun to outperform gold recently in a sign that the white metal may be ready to narrow the gap; the ratio chart of platinum/gold shows that the ratio is at a key level on the verge of a breakout:



The platinum/gold ratio formed a double-bottom earlier this year, a breakout above .80 in the platinum/gold ratio would target a move up to at least .85 in the ratio.

Traders can trade platinum in a couple ways:

  • Long platinum with a stop below $950 (risking roughly $50/ounce) and a target of $1200 ($200 of upside from current levels)
  • Long platinum/short gold in a dollar for dollar pairs trade. This can be done using the platinum exchange-traded fund PPLT and the gold exchange traded fund GLD or more seasoned traders might use futures contracts