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3/14/16

Chart of the day is...

...the gold/platinum ratio, four years:



I dialed up this chart after reading this reasonably interesting Pimco piece on gold last night (they think gold's mildly expensive right now and mentioned Pt as a potential alternative at the end of the note). The first question is the difficult one (for me the answer to the second is "probably yes") and as I stared at it the reason became apparent: I know nothing about platinum. 

Well that's not strictly true, I know it's white and shiny and people with more money than sense buy jewelry made out of it and then give you the "Ohhh no! It's not silvahhh, Oh ha haaaa, you can't see what it is? Oh dear...", and then you put it up your car's exhaust pipe somewhere for better living (which isn't working if you check out the latest world temperature data) and it mainly comes from South Africa and that amazing Norilsk mine up in Northeast Russia. No, I mean I don't really know its pricing mechanisms, where and how its price discovery works. 

A case of "To The Internetz Young Man!" and I snooped around for a while at the World Platinum Investment Council and Johnson Matthey websites. Turns out that roughly 2/3rds of Pt demand is autocatalyst and industrial, and roughly a third is for jewelry/bullion investment. In other words, demand is largely driven by utility rather than shiny, which makes it more like silver than gold.

So maybe the dumbass silverbugs should change their theme tune to "Silver's the poor man's platinum". Meanwhile, I'll stick to investing in the real asset class metal, if only to comply with the principle of not complicating one's life too much. End of silly Monday morning musing.