Platinum/Gold Ratio Suggests Economic Slowdown

Investors and analysts have a wide variety of different ratios that they focus on to get a better read on the market. Some like to look toward the S&P 500/gold ratio while others find solace in P/E figures. However, there is one lesser-known metric that has its roots firmly planted in the commodity world. The platinum/gold ratio is a precious metals combination that many use to gauge how markets are performing. While it may sound a bit unorthodox at first, there is sound reasoning behind watching this comparative metric [for more precious metals news and analysis subscribe to our free newsletter].

SPDR Gold Trust (ETF) (NYSEARCA:GLD)

The ratio pits the price of platinum versus that of gold, and is movements can often signal coming economic trends. The higher the ratio, the more economic bullishness that is expected. “There is a logical reason for this: Platinum is more rare than gold, so it usually trades at a premium to the yellow metal. When economic worries increase, however, the platinum premium to gold tends to get squeezed as investors seek gold’s perceived safety” writes Michael Tarsala. Also note that platinum is a far more useful metal in the industrial world, so a decline in the white metal often signals bearish sentiment for the industrial sector as well as the broad economy.

For much of 2012, this ratio has been steadily declining, leaving a cause for concern for many investors. Obviously the announcement of QE3 shook up the numbers a bit, as the precious metals world felt a nice boost from the open-ended easing, but despite the jump in the ratio over the past few weeks, its weak 2012 performance demands a closer look from investors who value its measurement methodology. Below, we outline three ETFs to help you invest in these two precious metals and make a play on this economic indicator [see also Technical Alert: Silver Makes Golden Cross].

SPDR Gold Trust (NYSEARCA:GLD): The biggest and most popular commodity ETF product in the world, GLD tracks physical gold bullion and has just over $76 billion in total assets.

Physical Platinum Shares (NYSEARCA:PPLT): The most popular platinum ETF out there, this physically-backed product has over $875 million in assets and has jumped by more than 6.5% in the past month [see also How To Play Peter Schiff’s “Bullion Collapse” Theory].

Precious Metals Baskets Trust (NYSEARCA:GLTR): The cleverly-titled GLTR contains physical holdings of all four precious metals. Obviously by holding both platinum and gold it will not be ideal if the ratio continues to drop, but it is a strong play for those who are bullish on the precious metals industry as a whole.

This article was originally written by Jared Cummans, and posted on CommodityHQ.

blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

The Top 10 Most Expensive Digital Cameras to Snap Stunning Shots With

The 10 Highest Quality Fast Food Restaurants In America Today

The 8 Best Halloween Decorating Ideas to Spook Up Your House

10 Marvel Women that Should Get a Movie Right Now

The 20 Best Remixes of Popular Songs that Will Make You Forget the Originals

7 Most Expensive Cities in the World

5 Least Expensive Cities in the World

10 Celebrities Who Believe In Scientology

10 High Margin Food Products to Build a Business Around

The 10 Most Expensive Clothing Stores in the United States to Get Decked Out At

The 5 Biggest Kickstarter Scams That Swindled Backers’ Donations

The 10 Most Expensive Boarding Schools In the World

50 Crazy Facts About Japan You Won’t Believe

Top 10 Least Expensive Hybrid Cars to Save the Planet With

The 10 Biggest ‘Gate’ Controversies in History

The 10 States with the Highest Nursing Shortages Leaving Their Hospitals Depleted

The 10 Best Value Investment Blogs that Every Investor Must Read

The 6 Cheapest Boarding Schools in Europe 2015

The 5 Most Expensive Cars To Insure in the World

The 10 Most Common Genetically Modified Foods

10 Self-Made Billionaires Who Came From Nothing

The 10 Most Expensive Cities to Live in North America

The 13 Most Expensive Headphones in the World to Represent

The Top 20 Wealthiest Soccer Teams in 2014

4 BuzzWorthy Cannabis Stocks And Some Smoking Derivative Plays

The 10 Healthiest Fast Food Chains in America to Dine At

The 5 Most Expensive Cat Food Brands You Can Spoil Your Kitty With

The 6 Best eCommerce Platforms for Small Businesses

The 10 Worst Mistakes an Entrepreneur Can Make

The 5 Most OP Characters in League of Legends to Carry Games and Crush Foes With

The 5 Best Foods to Eat Before Running that Will Help You Pound the Pavement

10 Glaring Plot Holes in The Walking Dead that a Zombie-Filled Bus Could Drive Through

The 5 Biggest Celebrity Stoners Who Love Their Reefer

The 10 Most Overrated Movies Of All Time by Out-of-Touch Critics

Top 6 Least Expensive Cruise Destinations For 2015 that Will Take You to Paradise

10 States with Lowest Substance Abuse Rates in America

The 14 Most Watched TV Finales Ever

The 10 Best Selling Role Playing Games of All Time for PC

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

Top 6 Cities For The Ultra Rich to Live in Comfort

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

How to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!