How Gold is Behaving When Compared to Platinum and Stocks
- Posted by JC Parets
- on August 22nd, 2011
And the saga continues – Gold prices climbed to a record high this morning above $1890/oz in New York and London. Meanwhile, Platinum prices also continue to rise as they reached a 3 year high. According to Bloomberg, Platinum for October delivery was up 0.8 percent at $1,890 an ounce after reaching $1,901.90, the highest price since July 2008.
It’s interesting to see Gold ($GLD) worth more than Platinum ($PLAT). I’m not sure how long that is going to last, however. Gold seems to be getting into that parabolic phase that issues in high demand sometimes get into. Not saying the correction will come today or tomorrow or even this week. These parabolic stages can last longer than investors expect. But I will say this: When the correction in Gold comes, look out below because it will be both fast and furious.
We have been talking about Gold heading higher since the inception of Allstarcharts. I don’t think that a correction in prices near term will change that. But rather than looking at Gold priced in Dollars, I would prefer to analyze the precious metal relative to stocks. I think its silly to price something in a denominator that weakens practically every day for an entire decade. Here is the chart showing Gold making new highs relative to the Dow Jones Industrial Average:
This is a major trend that has been in place for a while. We continue to bring it up as it continues to work (See Aug 4 and May 17). Sure I think that a correction is possible and actually to be expected sometime soon. But the macro trend that has been in place is still in place and I don’t think a short term selloff will change that.
If you own some Gold and haven’t taken at least a little bit off the table then I think you need to reevaluate your investment thesis. Even if it’s just a little bit. Personally I never met anyone who lost money taking profits.
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J.C. Parets is the Founder & President of Eagle Bay Capital, LLC. He earned the Chartered Market Technician designation (CMT) and is a member of the Market Technicians Association. More
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