Will Platinum Start To Outperform Gold?

Since Spring of 2008, Gold has really been running the show in the world of Precious metals. Sure, Silver had its moment last year, but remember – that came crashing down rather quickly, especially on a relative basis. Today I want to take a look at a very simple setup that we’re seeing in Platinum.

To me, this is a standard reversion to the mean trade that is backed by momentum divergences that we can take back to 2008. This is a weekly chart of Platinum relative to Gold. We can see the 200-week moving average beginning to flatten out, and higher lows in the Relative Strength Index as prices made fresh lows:

To be honest, this weekly chart of $PL_F / $GC_F reminds me a lot of the Silver daily chart that we were looking at this summer (see here). Granted that worked out very nicely, rallying 25%+ over the next month, so it’s a convenient comparison. But it looks the same to me. The silver setup was on a daily time frame and this one is on a weekly. The patterns are the same though.

Let’s see how it plays out. But I think we could see a similar reversion to the mean here targeting that flatting 200-week moving average. And like in Silver a few months ago, we could then see a continuation past that level.

From a risk management perspective, I’d like to see the price action remain above this (now) upward-sloping 50-week ma. As long as we can remain above there, it seem like a nice risk/reward. Momentum has really turned up hard telling us to at least pay attention. So I think we should.