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Relative Value of Precious Metals

We generally think of the precious metals as Gold, Silver, Platinum and Palladium. They are all metals that could be used in art, jewelry or coinage. The interesting aspect is that Gold grabs all of the headlines. For many historic and practical reasons, Gold is thought of as the ultimate store of value and that is why it held up better in the midst of the financial crisis over its precious metal cousins:

In 2008 the precious metals plummeted with equity markets while Gold held up better

It might take a few seconds for the above chart to make sense, but each line represents the ratio of a metal’s price versus that of Gold’s.  As you can see, all of these ratios sold off in 2008 as the prices of those metals fell faster than that of gold.  In the last few months we have seen silver and palladium’s price catch up to their normal ratios, while copper and specifically platinum have lagged far behind.  I was much more bullish on Silver a few months ago, but now it seems that if you want to make a play on metals, Platinum looks like the most attractive of the bunch.

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Continuing the Discussion

  1. Three Levels to Keep an Eye On | SurlyTrader linked to this post on May 3, 2011

    […] that it was less than half the level it hit in 1980, but in reality I have felt silver has been overpriced for a while.   I have had multiple very good calls on this blog, but I have never rehashed them for fear that […]

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