Thursday, February 14, 2013

Recent Technicals and Future Prognostications

I was asked how I feel about platinum right now and I decided to write a post on the technical behavior of precious metals, and touch on platinum too.

To start, gold and silver have been money for thousands of years, yet platinum has not always been seen that way.  Platinum was shaved off of silver like natural gas was flared from oil wells.  It has only been recently that platinum has been used in bullion coins.

I've always been very bullish on platinum because it is in such short supply.  The interesting thing about platinum is that it is not talked about as a monetary investment in broad terms.  So if there ever is a turn in investment and people move cash towards platinum it could be wildly bullish.

I looked at some short term charts today:  gold looks under bought, silver looks like it is in the middle of its recent range, and platinum looks over bought.  My coin dealer says silver and gold should follow platinum higher.

I think, looking at just the charts, silver could consolidate until May (although trading is becoming very volatile, signaling a coming breakout), gold looks like it should break out in April.  Platinum looks like it has already broken out.  I like to think of the complex as trading together but they don't move in tandem.  Look at how silver broke out in the spring of '11 and gold followed in the end of the summer.  Platinum spiked before the Fall of '08 much more than the others.

Looking ahead I will put it this way -  I think silver will trade 15:1 vs gold, I think that platinum will likely have a greater premium in the future due to its small supply, and I see gold moving to about $10k to $20k once rates top out.  I see rates having to get to 15% to kill the inflation that is and will be in the market.  This is a long term outlook mind you.

I think that the next leg for precious metals will rise a little faster than the second leg up.  I think gold will get between $4k to $5k during that time.  I think the Central Banks can print to buy bonds for about another year or so.  There will be a turning point where there is massive inflation in the system.  When it is undeniable rates will have to rise.

Then once rates rise I think gold will go parabolic.  This is when we see $10k to $20k.  I also think that the DJ will be 1:1 with gold during that time, and I think fiat currency will be burned into ash.  Then the system will have to be revalued, backed with gold, or all governments fail and people get to create a new political system.  I am hoping for the latter, thus why I will wish that all the good people of this blog buy silver and tell their friends this cause.

Of course there is also the kicker - when oil production plateaus it will spike price and kill the fiat currencies.  The EIA says it will happen in 2015, but they are as accurate at predicting oil production as the BLS is at predicting unemployment.  So I think it will be before then.  When this happens it will be perfect cover to raise rates.  The last thing the oilgarchy wants is anyone knowing that oil is finite and that we have no current technology to replace it EROEI wise.


  1. I like them all, LH! Au, Pt, Ag and Pd (in $-value of my holdings). Diversification is yet another one of my middle names...

    I am not a chemist, so I cannot predict the future quantities of Pt and Pd use as catalysts. Assuming (dangerous! "Ass-u-me"...) that nothing cheap comes along to replace them, then if the future turns out OK, then platinum-group metals will be just fine as an investment.

    As you already know, I buy and hold the physical. Charts are "puro griego" (pure Greek) to me.

  2. I enjoy your comments on ZH and look forward to reading your

  3. The FIAT kings won't give up easy. It is becoming more apparent that JP Morgan Chase is a "proxy" bank for the U.S. govt. They handle all EBT transactions and they probably are purchasing gold for them also. It wouldn't look good to the public if a FIAT king is buying gold. Add to that they are the main player in Silver manipulation. Their purchase in gold is a good sign for holders of "phyzz". Nice blog, thanks.