It was a very good day for the metals Friday, as they rose sharply in response to the dollar going into reverse after a sizable run-up. A very significant development was that platinum broke out of its Head-and-Shoulders bottom on strong volume, a move which we had expected that marks the start of a bull market. Copper, gold and silver also rose with silver having a particularly strong day, and although copper and silver have yet to break out of their Head-and-Shoulders bottom patterns, the breakout by platinum is a sign that they will follow suit and break out soon. We can see the breakout by platinum out of its fine Head-and-Shoulders bottom on its latest 6-month chart below.
An important point to make at this juncture is that platinum is VERY GOOD VALUE HERE. Our very long-term chart showing the platinum price relative to gold, reveals that it has never been cheaper relative to gold. Gold will buy more than three times as much platinum as it did just over 10 years ago back in 2008. You have to go back as far as 1982 to find a time when platinum was almost as cheap relative to gold as it is now. What this means, of course, is that is that there is a high probability that platinum is going to outperform gold going forward, and so if gold is in a bull market, as expected, platinum should perform even better. Another potential big driver for the platinum price is that, because 70% of it is produced in South Africa, a country whose leaders are determined to make the place end up like Zimbabwe, there could be serious supply disruptions if anarchy prevails. Note the pronounced bullish Falling Wedge on the chart for platinum relative to gold, which strongly supports the contention that platinum is set to outperform.
Click on chart to pop-up a larger, clearer version.
We'll end with a quick look at silver, where we see on its latest 6-month chart that although it didn't break out of its Head-and-Shoulders bottom yesterday like platinum did, it had a big up day with a large white candle on strong volume, which is very bullish and a sign that it is getting ready to break out.
Clive Maund has been president of www.clivemaund.com, a successful resource sector website, since its inception in 2003. He has 30 years' experience in technical analysis and has worked for banks, commodity brokers and stockbrokers in the City of London. He holds a Diploma in Technical Analysis from the UK Society of Technical Analysts.[NLINSERT]
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Charts provided by the author.
The above represents the opinion and analysis of Mr Maund, based on data available to him, at the time of writing. Mr. Maund's opinions are his own, and are not a recommendation or an offer to buy or sell securities. Mr. Maund is an independent analyst who receives no compensation of any kind from any groups, individuals or corporations mentioned in his reports. As trading and investing in any financial markets may involve serious risk of loss, Mr. Maund recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction and do your own due diligence and research when making any kind of a transaction with financial ramifications. Although a qualified and experienced stock market analyst, Clive Maund is not a Registered Securities Advisor. Therefore Mr. Maund's opinions on the market and stocks can only be construed as a solicitation to buy and sell securities when they are subject to the prior approval and endorsement of a Registered Securities Advisor operating in accordance with the appropriate regulations in your area of jurisdiction.