Platinum vs Gold: The Economic Indicator?

Platinum is a precious metal, along with Gold, Silver, etc.  Often we think of it as a luxury metal, or something that rappers coat their teeth in, but in fact its biggest use is in our old friend the Catalytic Converter.

So one can deduce that Platinums price is heavily tied to the auto industry, the more cars produced, the more catalytic converters are needed and the higher the value of the metal due to its increased use and thus more valuable due to there being less of it to mine.

Platinums price has been pretty steady, except for the crash in 2008 which you can see in the chart below

This was due to everyone basically crapping their pants, and the auto industry going farther into the tank, and being saved by the bailouts from the Federal Government.

Gold however has stayed pretty consistent until 2004, when it began to skyrocket after, this is due to the fact that Gold is not tied to any industry in particular and has always been a store of value in tough economic times and people flock to it when they see instability in world/national economies and/or currency issues, of which we see both in the present.

Looking at a Chart here of Gold vs. Platinum we can see that even during the “crash” Platinum stayed above Gold prices until just recently.

in 2011 when Gold jumped to its highest we see it pacing with Platinum and by the beginning of 2012 Platinum was being outpaced by Gold, Which we still see today.

Prior to this we have to look back to the early 1970′s when The market was facing a recession and Gold skyrocketed and outpaced Platinum.

Platinum despite being a precious metal is seen more as an Industrial metal and a good indicator of correlation to economic growth while gold prices are a good correlating measure of lack of confidence in “traditional” investments and currencies.

On a few survival Blogs out there, there has been a call to “buy platinum” since it is currently under-performing gold, and historically outpaces it.  This i believe is shortsighted.  Now any purchase of precious metals is a “Good Buy” in my eyes, but to buy Platinum over Gold because of its price, is not a “Good Buy” overall.  Like iv illustrated platinum rises during times of economic expansion, when more cars are produced for people who have the extra cash to buy new cars.

I don’t see any real economic expansion on the horizon, and personally I would not buy Platinum in large amounts.  It is always good to be prepared, this means being prepared for good times as well, which is why having some Platinum in your Prepper Portfolio would be a good thing.  I recommend a 10-20% investment of precious metals of your overall wealth and savings, but no more than 15% of that should be in platinum at the moment.  I see platinum being outpaced by gold for the time being, however it might return to its position if the election kicks out Obama and markets take confidence in false Republican economic plans.

CONCLUSION

BUY SILVER over GOLD, BUY GOLD OVER PLATINUM

Silver is still a better buy.  Platinum prices are only ANOTHER indicator that things are not going well and you need to take note, and continue to prep

Platinum should be in your metals as a LONG LONG LONG term holding.  Why?

Because platinum has uses.  When the crash of our monetary system comes, there WILL be something to replace it, what that is I dont know, but eventually there will be some kind of reboot to the system and people will need to buy cars again at some point, making platinum more needed once again.  If this crisis/crash stretches over our whole lifetimes, Gold would be a better buy, but like i just said you need to prep for Good times as well.

What do you think?

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