Gold vs. Platinum

Au” and “Pt” may be dull chemical elements, but gold and platinum have certainly played their respective parts during the unfolding of the financial crisis. Revisiting the metals’ movements, it is clear from the table below that gold’s decline was much smaller than that of platinum - as platinum suffered from the deterioration in the auto industry - but the recovery of gold has also been lesser than that of platinum.

The red line shows the platinum price, having peaked in March 2008 at $2,251 and topped out relative to gold in May at a premium of 140%. Technical analysis-orientated readers will also notice the blue MACD histograms moving into positive territory, indicating a buy signal for platinum in relative terms.
Although gold may experience a further pull-back in the short term , the longer-term outlook seems fairly positive as a result of a solid supply/demand situation, a likely waning appetite for U.S. dollars and store-of-value considerations. According to the Telegraph, Merrill Lynch predicted that gold would soon break through its all time-high of $1,030 an ounce, and would hit $1,150 by June. Paul Walker, CEO of GFMS, said gold could rise to $1,100 by the end of 2009 as a result of the monetization of government debt. However, based on the relative chart above, platinum should have more upside potential than the yellow metal over the next few months.