Platinum, a precious metal significantly rarer than gold, is currently undervalued compared to its historical value. Despite reaching a peak of over $2,200 in 2008, platinum now trades below $1,000, indicating a substantial decline in real terms. A giant Head-and-Shoulders bottom pattern has been forming since 2015, suggesting a potential breakout and rally.
The 6-month chart shows an upward trend and a bullish cross of moving averages. Platinum’s price relative to gold implies a long period of outperformance for platinum. This analysis highlights the potential for significant gains in platinum investments, making it an opportune time for investors to consider purchasing platinum stocks.
If all the platinum ever mined were melted and poured into an Olympic-sized pool, the platinum would barely reach your ankles. Gold, however, would fill three pools. So, in a world drowning in worthless paper money, it is very clear that there is going to be a flight into all precious metals. This is already happening with gold and silver, and it will soon spread to other metals, especially super-rare platinum.
On its 20-year chart, we can see that platinum has put in an awful performance since its 2008 peak. It got to over $2200 early in 2008 and is now trading at well under $1000, and if you take continuous inflation into account during all the intervening years, it is clear that, in real terms, it is now trading at a dismally low price. While it’s true that we have taken a freak peak at the top of a “stalagmite top” as our starting point, we can see that, essentially, it has been in a grueling bear market from that peak right through to the Covid Crash low in the Spring of 2020 when a deliberately orchestrated global mass psychosis saw many commodities such as oil “drop through the floor.”
The big picture, though, is that it has been marking out a giant base pattern since 2015, a giant base pattern that can be classified as a Head-and-Shoulders bottom. The 10-year chart enables us to view the Head-and-shoulders bottom more comfortably, and there are several interesting points to observe in this chart. The first is that the price is still relatively close to the band of strong support at the lower boundary of the pattern, roughly between $760 and $840 — as mentioned above, the freak Covid Crash drop in the Spring of 2020 can and should be ignored. This means that it is still at a very good price as its anticipated major bullmarket hasn’t even started yet — and it hasn’t even started to start, although we are seeing the first stirrings.
The next related point is that it will break out this base pattern and really get moving once it has succeeded in breaking above the zone of resistance, marking its upper boundary, which is roughly $1300 – $1400. Lastly, although the Accumulation line is still rather weak, there has been a noticeable buildup in volume in recent weeks, which is believed to be the precursor to a rally.
Lastly, just to emphasize just how cheap platinum is, we will look at the 20-year chart of its price relative to the price of gold. This is a really rather astounding chart as it shows that platinum is at about one-fifth of its price relative to gold compared to where prices were back in the mid-2000s, and given that the downtrend channel shown that has been in force from 2010 is converging, it implies that we could see an upside breakout by platinum relative to gold before much longer that would lead to a long period of outperformance by platinum, and also given that we know where gold is headed, the gains made by platinum could be spectacular.
The conclusion must be that this is an excellent time to buy platinum and platinum-related investments. So, we will be on the lookout for better platinum stocks going forward.
