The platinum/silver ratio

Overdate

I was recently checking some historical metals prices and noticed that over the past 10 years, the price of platinum has usually been close to 100 times the price of silver, sometimes a bit higher and sometimes a bit lower.

That ratio has dramatically changed over the past year - platinum is now only about 48 times the price of silver.

Both platinum and silver are industrial metals as well as precious metals, with uses in industry, jewelry and coinage. This being the case, I would expect them both to respond in a similar manner to the changing fortunes of the world economy.

However, for some reason platinum has severely underperformed silver during the past year or two. Any thoughts as to why this is happening, and whether it is likely to continue?

jmski52

My best guess would be that while both are industrial metals, platinum may be more closely-tied to autos, while silver may be more closely tied to electronics. It is certainly an interesting divergence from the norm, and it sure does seem to indicate that platinum is a stronger buy right now than silver.

Pokermandude

<< <i>My best guess would be that while both are industrial metals, platinum may be more closely-tied to autos, while silver may be more closely tied to electronics. It is certainly an interesting divergence from the norm, and it sure does seem to indicate that platinum is a stronger buy right now than silver. >>



Indeed, platinum seems to be hit pretty hard on sell offs. Of course that's all paper trading. Physical certainly has a large premium.

I have a bunch of liquid cash right now, I know a guy selling 1/2oz platinum maples, wants about $140 over spot per ounce/$70 per coin over spot on them. I've noticed previously that 1/2oz eagles typically have a much lower premium than 1oz eagles. Same for maples? Any reason for this? Seems very odd to me.

I virtually never see physical platinum around here, but it is a hair cheaper than the regular online dealers (available to Canada, eg, not Tulving ) if they even have some in stock. Think they're worth buying? No idea how many he has.

Ahrensdad

Platinum has always been a harder sell for me when I have them in inventory. Hardly anyone asks for it.

Baley

Alright, that last comment did it for me, I've been eyeballing the inversion of gold vs platinum prices for a while, and now a contrarian signal? Too tempting.

Just bought some APE quarters and halves.

Pokermandude

Just bought the coins in question. Three 1/2oz platinum maples, still in individually mint sealed packaging to boot. Paid $65 per coin over spot/melt, not too bad I think. He really didn't want to budge on the price, as that is the amount he paid (bought them from a customer at spot) not long ago. Also bought a dozen Canadian junk silver dollars from him at a small discount too. All in all a good PM buying day Pics will be in the Friday PM porn thread.