Gold and silver markets gathered some strength in May. Prices rallied to multi-month highs. But in the big picture both metals still remain mired in a sideways range since they bottomed out late last year. Will they finally break out to the upside this summer? Time will tell.
Meanwhile, the most undervalued precious metal at this time may be one that’s geologically rarest yet rarely discussed. That metal is platinum.
Platinum prices currently trade at a discount to gold prices. Historically, platinum has normally traded at a sizeable premium. For most of 2014, an ounce of platinum was more expensive than an ounce of gold. It’s a near certainty that at some point in the future platinum prices will once again eclipse gold prices. Both platinum and palladium are headed for supply deficits in 2015, setting up the potential for strong price gains later this year and into next.
Ways to Profit from Platinum
You can play the platinum:gold ratio by buying platinum when it’s below 1:1 and selling it for gold when the ratio is elevated. As recently as 2008, the ratio got to 2:1. A more-likely-to-be-achieved price target would be 1.5:1 over the next few years. That would represent a better than 50% platinum outperformance relative to gold at current prices.
You can invest in platinum via bullion coins such as the Canadian Platinum Maple Leaf. Platinum American Eagles and Proof Eagles are available, but in recent years the U.S. Mint has stopped producing them. If you don’t want to directly own physical platinum, you might consider buying platinum through bullion storage services or electronic exchanges such as James Turk’s GoldMoney.
You can also own physical-backed exchange-traded funds. ETFS Physical Platinum (PPLT) and Sprott Physical Platinum and Palladium (SPPP) are two worth taking a look at.