Rising Gold-Platinum Ratio signals loss of market confidence

Gold-to-Platinum ratio rose above 1 and stayed sustainably above there in early September.

The trend has been rising since then, signaling the market remained concerned about global economic slowdown.

Industrial demand makes up over 80% of total Platinum demand, with autocatalytic demand taking up more than 33% of total demand, but it only accounts for around 10% of total Gold demand.

The ‘industrial’ characteristic in Platinum makes its price movement more synchronized with stocks, Crude Oil and other ‘higher risk assets’.

Therefore, it tends to lose its glitter to Gold during economic turmoil and uncertainty. On the contrary, Gold is often considered as a store of value and a hedge against inflation.

It is especially attractive when Global central bankers are competing to devalue their countries’ currencies so as to stimulate growth.

Gold’s fall in recent days has been driven by the broadly based decline in market sentiment. The sell-off in the near-term is not expected to derail the metal’s long-term up-trend.

As long as low rate environment persists and World central bankers expand measures to bolster the economy, buying interests in Gold will emerge when there’s correction IMO and I have stated that in my weekly reports on Gold, Silver and Crude Oil.

Paul A. Ebeling, Jnr.

Paul A. Ebeling, Jnr

Paul A. Ebeling, Jnr. writes and publishes The Red Roadmaster’s Technical Report on the US Major Market Indices, a weekly, highly-regarded financial market letter, read by opinion makers, business leaders and organizations around the world.

Paul A. Ebeling, Jnr has studied the global financial and stock markets since 1984, following a successful business career that included investment banking, and market and business analysis. He is a specialist in equities/commodities, and an accomplished chart reader who advises technicians with regard to Major Indices Resistance/Support Levels.

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Posted by Shayne Heffernan on Sep 24th, 2011and filed underCurrencies, Fundamental Analysis, Gold, Gold & Precious Metals, Heffernan Capital Management, Latest News, Metals, Paul Ebeling, Platium, Research, USA.You can follow any responses to this entry through theRSS 2.0Responses are currently closed, but you can trackback from your own site.