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An Even Better Deal than Gold

By Jeff Clark
Thursday, January 12, 2012

It's a good time to buy gold and silver. But it's a great time to buy platinum.
 
Platinum has sold off alongside all the other precious metals recently. It's down nearly 30% in just the past four months. Part of that selloff has to do with fears of a global economic slowdown. Part of it is institutions and individuals liquidating positions to raise cash. And it has pushed the shiny, white metal to its lowest price in two years.
 
Relative to gold, however, platinum is as cheap as it has been in over two decades.
 
Take a look at this chart of the gold-to-platinum ratio over the last 20 years... 
 
Platinum Cheaper Than Gold For First Time in 20 Years
 
This chart compares the price of platinum to the price of gold. When the black line rises, platinum is outperforming gold. When the line falls – as it has been since April of last year – platinum is underperforming gold. As you can see, platinum is now at the lowest relative value to gold than it has been in the past 20 years.
 
Platinum is now cheaper than gold – which doesn't make sense. Platinum is 30 times rarer than gold. Most of the world's supply of platinum comes from the Bushveld geological structure in South Africa – where most of the "easy to get to" metal has already been extracted. There's still plenty of platinum in the structure, but the cost of getting it out of the ground is growing more and more expensive. This will keep pressure on the available supply.
 
Meanwhile, demand for platinum is increasing. Not only does it represent a store of value as a precious metal, but it also has industrial applications for use in electronics, automobiles, dentistry, and jewelry.
 
The supply/demand equation is shifting in favor of higher platinum prices. The gold-to-platinum ratio is as low as it has ever been. So anyone looking to invest in precious metals has to consider buying platinum at today's discounted price.
 
One easy way to get exposure to the metal is though the UBS Long Platinum Exchange Trade Notes (NYSE: PTM). This exchange-traded note is designed to track the performance of the Bloomberg CMCI Platinum Total Return Index. Basically, as the price of the metal rises and falls, the price of PTM does the same.
 
Precious metal prices are bouncing off the dramatic lows they reached a couple weeks ago. If you like the idea of buying gold and silver at current prices, you'll love the idea of buying platinum.
 
Best regards and good trading,
 
Jeff Clark




Further Reading:

Earlier this week, Jeff was featured on our publisher's radio program, Stansberry Radio. The segment is a "can't miss" for traders...
 
In the interview, Jeff discusses the success of his trades and his best strategies in 2011, the biggest mistakes most traders make, and why you must trade to beat the market this year. "Buy and hold didn't work last year," he says. "It hasn't worked in 10 years... and I don't see it working in 2012. You have to be willing to trade."
 
You can access the full interview for free – and get Jeff's predictions on 2012 – by clicking here.

In The Daily Crux
Market Notes
Gold is trying to start a fresh uptrend... price jumps to a four-week high as November data show record gold purchases in China.
 
"Trophy" copper miner Freeport-McMoRan is already up 12% in 2012.
 
Natural gas sinks to a fresh two-year low... that means cheap fuel for natural-gas-engine maker Westport.
 
Homebuilders DR Horton, Lennar, and Toll Brothers break out to 52-week highs... a classic "bad to less bad" rally.
Market Watch
Symbol Price
Change
52-Wk
S&P 500 1292.48 +0.0% +1.4%
Oil (USO) 38.92 -1.1% +0.1%
Gold (GLD) 159.67 +0.7% +18.4%
Silver (SLV) 29.14 +0.3% +0.9%
U.S. Dollar 81.30 +0.5% +0.5%
Euro 1.27 -0.6% -2.1%
Volatility (^VIX) 21.05 +1.7% +24.6%
Gold Stocks (^HUI) 522.03 -1.1% -4.2%
10-Year Yield 1.90 -3.6% -43.1%

World ETFs
Symbol Price
Change
52-Wk
USA (SPY) 129.20 +0.1% +3.5%
S. Africa (EZA) 62.33 0.0% -9.7%
Canada (EWC) 27.20 -0.5% -10.9%
S. Korea (EWY) 52.58 -1.1% -13.5%
Lat.America (ILF) 44.54 +0.5% -13.8%
China (FXI) 36.74 +0.0% -14.5%
Singapore (EWS) 11.31 +0.2% -15.0%
Japan (EWJ) 9.17 -0.4% -15.4%
Taiwan (EWT) 12.19 +0.2% -17.8%
Israel (ISL) 13.25 -1.9% -19.1%
India (IFN) 20.56 +0.1% -35.3%
Russia (TRF) 14.35 -0.1% -40.0%

Sector ETFs
Symbol Price
Change
52-Wk
Retail (PMR) 22.36 -0.3% +19.8%
Big Pharma (PPH) 73.61 +0.6% +16.0%
Utilities (XLU) 34.96 -0.5% +15.8%
Health Care (IYH) 73.34 +0.1% +11.8%
Consumer Svcs (IYC) 73.02 +0.3% +8.8%
Real Estate (IYR) 57.81 +0.9% +8.1%
Big Tech (QQQQ) 58.16 +0.2% +4.5%
Industrials (IYJ) 66.69 +0.4% +1.8%
Transportation (IYT) 92.60 +0.4% +0.8%
Defense (PPA) 18.87 +0.6% -0.7%
Media (PBS) 13.78 +0.4% -2.0%
Biotech (PBE) 21.11 +0.4% -2.4%
Internet (HHH) 70.21 +0.1% -3.6%
Insurance (PIC) 15.31 +0.2% -5.0%
Construction (PKB) 12.61 +1.5% -5.2%
Telecom (IYZ) 21.26 +0.6% -5.3%
Water (PHO) 17.66 +0.4% -7.0%
Software (PSJ) 23.60 +0.6% -7.9%
Financials (IYF) 51.79 +1.0% -9.8%
Basic Mat (IYM) 68.55 +1.0% -10.4%
Oil Service (OIH) 121.00 +2.4% -10.7%
Semis (PSI) 14.55 +0.6% -13.6%
Nanotech (PXN) 6.36 +2.1% -36.8%
Alt. Energy (PBW) 5.70 +5.6% -46.4%

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