Most of the talk about investing in precious metals revolves around gold and silver. Platinum does not seem to have as many champions. Gold or Platinum? What will the price charts reveal in trying to determine which asset will perform better in the coming years?
Gold outperformed Platinum between 2008 and the end of 2012. The question at hand is will that trend continue, or has a new trend begun?
Relative to volume mined, platinum has many more industrial uses than either silver or gold. In fact, more than 50% of the yearly production of platinum is consumed by industrial uses. Perhaps this would explain why Platinum prices crashed as the US economy began contracting in 2008.
Gold set its high water mark in 2011, and has been in a downward trend ever since. The chart of gold looks like a completed price pattern in the long direction and the descent looks incomplete.
Platinum registered its all-time high at the beginning of 2008. From that point platinum started a rally that does not yet look complete. I think platinum has further to run in the long direction and will likely register a new all-time high. What is the criteria for determining if a price pattern is complete or incomplete? The application of Elliott Wave (EW) analysis.
Using EW analysis of the platinum priced in gold chart, it looks like it is giving the same message as the individual price charts of gold and platinum. If you simply draw a line from the highest price point of the platinum priced in gold chart to the lowest point, you can see that the trend was in the short direction for the eleven year period that began in 2001. Price action had some dramatic moves, up and down, but in the most basic terms the trend was down and it happened in a three wave corrective pattern.
Using the principles of EW, it is now probable that price would rise to at least 56 on the chart above and potentially as high as 70 depending on what the ultimate EW pattern turns out to be. Platinum outperforming gold should last several more years, at least three but maybe more.