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Gold to Platinum Ratio The gold-to-platinum ratio is the price of gold divided by the price of platinum. It describes how many ounces of platinum are needed to purchase one ounce of gold, indicating the relative strength of gold prices compared with platinum prices. The indicator works just as the gold-to-silver ratio and it shows whether gold is undervalued or overvalued relative to platinum (and vice versa). When the ratio is low, it means that platinum is overvalued relative to gold. When the ratio is high, it means that platinum is undervalued relative to gold. Investors can thus use the ratio as a timing indicator deciding when to buy gold or platinum, or which metal to buy at any given time. The chart below presents the number of ounces of platinum it has taken to buy a single ounce of gold since 1975 (we use futures prices, as the data series for the London fix for platinum is available only beginning in 1990). Chart 1: Gold-to-platinum ratio (price of gold divided by the price of platinum, red line, right axis), price of gold (yellow line, left axis, Comex gold futures, front month) and price of platinum (blue line, left axis, Nymex platinum futures, front month) from 1975 to May 13, 2016. 
As one can see, the ratio has been below one most of the time. It means that platinum has traded higher than gold, as one ounce of gold has bought less than an ounce of platinum. It makes perfect sense as the supply of platinum is lower than the supply of gold (there used to be strong industrial demand for platinum). However, gold started to be more expensive than platinum at the beginning of 2015, indicating low confidence in the global economy. This is because gold is mostly a safe-haven asset, while platinum is an industrial metal. Thus the gold-to-platinum ratio is a useful indicator of economic confidence among investors. Gold tends to outperform platinum when the confidence in the government, economy and fiat money is deteriorating, while it underperforms platinum during periods of monetary stability, economic growth and high confidence in the financial system. Generally, the gold-to-platinum ratio was rising during the boom in the gold market in the 1970s and 2000s, and was declining during the bear market in gold during the 1980s and the 1990s. We encourage you to learn more about the shiny metal – not only about its relationship with platinum, but also how to successfully use gold as an investment and how to profitably trade it. A great way to start is to sign up for our gold newsletter today. It's free and if you don't like it, you can easily unsubscribe. Related terms: -
A bear market refers to a decline in prices, usually for an extended period, in a single security or asset, group of securities or the securities market as a whole. Its opposite is a bull market where prices are rising. In case of precious metals, the great gold bear market started in 1980 after the major, long-term top. Read more -
A bull market is characterized by optimism, investor confidence and expectations that prices will tend to go up. During a bull market in stocks prices are expected to rise even after severe declines. In the precious metals market, however, the situation is quite different. Bear markets can last for a long time and there is no confidence that serious slumps will be followed by periods of recovery. In case of precious metals, the secular gold bull market started in 1999. Some say that it ended in 2011, but this doesn't seem to be the case in our opinion as the fundamental drivers remain in place and the key Fibonacci retracement (61.8%) wasn't broken. Read more -
Fiat money is a currency that a government has declared to be legal tender, but is not backed by a physical commodity. The term derives from the Latin fiat (“it shall be” or “let it be done”) as fiat money did not spontaneously emerge in the free market, but it was established by government regulation or law. Contrary to commodity money, which is money that is at the same time a commercial commodity, fiat money is a legal claim, which derives all its properties from the law. It is neither a commercial commodity, nor a title to any such commodity, so it is irredeemable paper money without any intrinsic value. Read more -
Chemically, gold is an element with the symbol Au and atomic number 79. It belongs to noble metals and is a unique element. First of all, it is extremely rare. In the Earth’s crust, gold occurs 19 times less frequently than silver and 15 thousand times less frequently than copper. It is the only metal being yellow with a high luster, to which it owes its Latin name ‘aurum’, meaning “shining dawn.” Read more -
Gold had served as money for thousands of years until 1971 when the gold standard was abandoned for a fiat currency system. Since that time, gold has been used as an investment. Gold is often classified as a commodity; however, it behaves more like a currency. The yellow metal is very weakly correlated with other commodities and is less used in the industry. Unlike national currencies, the yellow metal is not tied to any particular country. Gold is a global monetary asset and its price reflects the global sentiment, however, it is mostly influenced by the U.S. macroeconomic conditions. Read more -
Trading gold-silver ratio can earn you money while you remain invested in the precious metals at all times - that's the first and foremost reason why every gold and silver investor should know more about this ratio. Here's the gold to silver ratio explained. Read more -
The price of gold, as each price, is determined by the market forces of demand and supply. The supply is the amount of a good offered for sale at each price. Therefore, the gold supply is the amount of gold offered for sale at a given price. The gold supply in that sense should not be confused with the annual supply of gold widely analyzed by many analysts (we will explain this later). The annual supply of gold comes from recycling, net hedging and mining production. Read more -
The gold-to-palladium ratio is the price of gold divided by the price of palladium. The indicator works just as the gold-to-silver ratio or gold-to-platinum ratio and it shows how many ounces of palladium one ounce of gold can buy. It measures the relative value of gold and palladium, indicating whether gold or palladium are undervalued or overvalued relative to each other. When the ratio is low, it means that gold is undervalued relative to palladium. When the ratio is high, it means that gold is overvalued relative to palladium. Investors can thus use the ratio as a timing indicator deciding when to rebalance their positions in gold and palladium. Read more -
Chemically, platinum is an element with the symbol Pt and atomic number 78. It belongs to noble metals, being one of the rarer elements in Earth's crust. Platinum is also a member of the family of platinum group metals (PGMs) which also includes palladium, rhodium, iridium, osmium, and ruthenium. It is the least reactive metal and, as other precious metals, it resists corrosion. Due to its malleability and ductility (and resistance to wear and tarnish), platinum is also widely used in the jewelry industry as a substitute for gold. Platinum is silver to dark steel-grey in color, which probably explains why it is often mistaken for silver. Actually, its name derives from the Spanish platina, literally meaning “little silver”. Read more -
Platinum has never practically served as money (except for a short period in Russia, where platinum coins were used as a regular national currency), but it is used an investment. Because it is a precious metal, platinum often trades directionally with gold. However, platinum is much more widely used in the industry; therefore, it behaves more like a commodity and it is more business cycle-sensitive than gold or even silver. Read more -
The platinum-to-palladium ratio is the price of platinum divided by the price of palladium. The indicator works just as the gold-to-silver ratio, the gold-to-platinum ratio or the gold-to-palladium ratio, and it shows how many ounces of palladium one ounce of platinum can buy. It measures the relative strength of platinum prices compared to palladium prices. When the ratio is low, it means that platinum is undervalued relative to palladium. When the ratio is high, it means that platinum is overvalued relative to palladium. Investors can thus use the ratio as a timing indicator deciding when to reallocate investment positions between these two precious metals. Read more -
A safe-haven asset is an asset that is uncorrelated (weak safe-haven) or negatively correlated (strong safe haven) with another asset or portfolio in times of market stress or turmoil. It should not be confused with a hedge, which is an asset that is uncorrelated (weak hedge) or negatively correlated (strong hedge) with another asset or portfolio on average. Hence, a safe-haven asset protects investors during crises, unlike a hedge, which protects them in normal times, but not necessarily during turmoil. Thus, a safe-haven asset is expected to retain its value or even increase its value in times of market turbulence, when most asset prices decline. Read more Back Did you enjoy the article? Share it with the others!
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