Interesting Claimed Stock Market Predictor: Gold/Platinum Ratio

giorgio11

An interesting article in today's Marketwatch claims that the ratio of gold to platinum, when it is high (as now; gold sucks, platinum sucks worse), predicts a healthy stock market. And more so than nine other predictors claimed valid, including most notably Schiller's Cyclically Adjusted P/E Ratio. And it suggests that the stock market has "more room to run."

https://marketwatch.com/story/this-little-known-but-accurate-market-predictor-says-stocks-still-have-their-mojo-2018-07-03

I hope this is true for the sake of my retirement accounts which I plan to start withdrawing from in about two years!

Kind regards

George

Timbuk3

Interesting !!!

AUandAG

A decade or more of nothing other than suffering especially under that POS Obama. About time there is some optimism and the stock market will double in the next 5 years. The demand for growth has been pent up for way too long.

bob

jmski52

Of course, you could just buy platinum outright, and be done with it.

giorgio11

Nothing like catching a falling knife ... Down $480 / 36% in the last five years. Or is it Buy Low, Sell High?

Kind regards,

George

derryb

I would argue, that while high, the stock market is not healthy. Index highs have been driven by heavy buybacks by the companies that make up the various indexes used to guage market "health."

Tax cut sparks record-setting $178 billion buyback boom

Note the hidden jewel in the story: "tops the prior record of $172 billion set in 2007, just prior to the start of the Great Recession."

jmski52

Buy high? Or buy low? Seems like platinum is on sale, 36% off.

giorgio11

I said, "buy low," and I think the APEs right now are an interesting value proposition. @jmski52 what's your preferred vehicle for platinum right now? How have you done (f you don't mind my asking)?

Kind regards,

George

jmski52

George, almost all of my platinum is Platinum Eagles but I bought a roll of Platinum Maples not too long ago, and I have a few Platinum Queens Beasts as well.

I started buying platinum for keeps in about 2000. In 2003, I decided to chase the low mintage issues. In 2006, I started my Registry Set and I completed the set in 2016. I rationalized that buying some platinum gradually was the least risky way to build a position and by collecting the series, it was more interesting. A few years, I bought multiples and many of those years still have nice gains. Most of the recent years do not. But, by averaging in, if I were to sell all of my platinum today, I'd have a decent gain. This past year, I maintained a more aggressive strategy with platinum because of the lower prices and because I had more discretionary income to deploy. I'm doing what I suggest here from time to time - and I've not been hurt by lower prices because it's a long term strategy. If I hadn't been buying all those low-priced years (like this one), I wouldn't be able to say what I've just said. Platinum is roughly 15% of my metals portfolio, although my original target was 25%, which means that I just may be buying more in the near future.

**The biggest part of this, is that whenever I sell something to raise cash, I can pick and choose which bullion to sell in order to zero out my current tax liability and still keep the whole position in a healthy state. All of this has to be done with long term funds.
**
The price trend for most assets is always up, over time. However, if a massive deflation ever materializes, I will have physical assets with NO debt. You could do the same thing with a mutual fund, but I prefer the advantages of having no account somewhere being "managed" by God knows who, and if a massive deflation were to occur, metals wouldn't be the only things affected. It's all relative.

giorgio11

@jmski52 Dollar cost averaging + no debt = way for the "common man" (excuse the expression) to get rich. Lots of distilled wisdom in your post. If I could give it 5 Likes, I would.

After "retiring" from Heritage and selling essentially all of my inventory in 2016, I sat around and did what I wanted for a couple of years. I didn't think I would get bored, because I have a lot of interests: Music; languages; traveling; investing; reading; running; on and on.

I was wrong. I got bored. It turns out, like a lot of men (and women), I have to_ do stuff. _

So the only numismatic assets I had to re-fund my coin-dealer inventory was a bunch of PMs coins/90% I had squirreled away for Ye Rainy Day. I sold all of that, and am now largely PM-less. But I have some nice new coins and a new CAC dealer button.

I really, really appreciate your sharing all of this with me and others. Some great ideas here.

Kind regards,

George

topstuf

I bought about 50 Plat Nobles when they first came out anticipating that ...someone... might buy them and I could stock them after that.

Boy was I wrong!

jmski52

When buying platinum at a bargain price, it's best to remember that when you decide to liquidate, you may very well be selling at a bargain price, and it won't feel nearly as good as when you bought it.

The point is, whether it's gold, silver or platinum - the market does what it wants to do, and not what you want it to do. When an opportunity comes along, evaluate it.

The fact is that platinum is a scarce commodity with limited mining output and a known level of industrial usage in a world that is increasing in population. There are times when those Platinum Nobles could have been sold during a spike in demand/price. When that happens, don't be in love with them.

giorgio11

Yeah @jmski52 @topstuf , not to pile on, but buying 50 Plat Nobles at one time is not dollar-cost averaging. Having said that, I have done a lot better in the stock market over the years doing relatively simple strategies such as buying and holding high-quality index funds and growth funds than I have at buying and selling PMs. Well, except for 2012, or whenever the last great bull market in silver and gold was, I mean even I did well in that one. The line to sell at SilverTowne was three deep all the way across their tables.

Kind regards,

George