Is It Time to Sell Platinum?
With gold breaking the $1,000 barrier, silver riding at a ten-year high and precious metals up across the board, the question has to be asked – is it now time to sell platinum?
Between 1992 and 1999 platinum stayed around the 0 per ounce mark but at the turn of the century platinum commenced an inexorable rise because of the demand in the electronics sector – the internet bubble fueld PC and laptop demand. Then the warning bells sounded over economic performance and from the 0 level in January 2001, platinum peaked at almost ,200 in early 2008 and drastically fell back to 0 by the end of the year – Obama was elected and a 0 billion stimulus plan from the US alone was promised as an injection into the economy, primarily the banking sector.
This led to the drop in platinum prices seen in the early days of 2009 – such a capital injection from the taxpayer was rare and taxpayers around the world were finding more an more money being pumped into the global economy. He initial reaction of metal speculators, particularly those looking at platinum and precious metals as a safe haven in the very harsh economy, suddenly saw some light at the end of the tunnel – demand for platinum dropped and dropped like the proverbial rock.
Since this platinum crash, the spot price has steadily recovered to where it is now (September 2009) trading at around the $1,250 mark – a far cry from the dizzying heights of $2,200 but nevertheless a remarkable recovery from the low of $800.
The burning issue is whether the price is going to recover further – and that really depends on your view as to whether the economy is going to turn the corner and recovery commences or not. It will depend on stock and bond market peformance – if they recover, the professional investor will drop his precious metal holdings and liquidate to invest in order to take advantage of the market recovery. A close eye needs to be kept on earnings and profit performances and especially whether they are coming at the level of, or better than analyst expectations.
A good guide is the hedge fund market – where many have laid the blame for the current economic malaise. For the year to date, the KDY-index has returned in excess of 17% from the basket of hedge funds it tracks – that’s good news for those looking for super-bonuses and for those looking for recovery.
It is very bad news for those looking for future platinum value increases and signals that the time to sell has definitely arrived – for further proof, look at how the value of platinum has hit a plateau and is rebounding off the ,200 price ceiling – speculators and traders simply don’t know which way they should be going and are waiting and watching to see what will happen next – the current round of earnings results in Wall Street are primarily positive.
Platinum is not going higher – sell.
Filed under: Financial Advice