In continuation of yesterday's post, Going Against the Grain, I want to focus on another asset that can be characterized as a laggard. Platinum. Let's have a look at Platinum in relation to its more popular cousin, and by its lonesome.
Platinum has steadily underperformed Gold since the beginning of the Great Financial Crisis, and recently hit all-time lows relative to Gold in the spring of last year. Notice that the ratio line has remained below the 1982 lows since 2018. Lows that were an outlier prior to 2015.
The chart below highlights the historic nature of the present performance of Platinum in relation to Gold.
When we zoom in it appears that Platinum has begun to bottom relative to Gold, while in a bullish momentum regime. It has even outperformed over the last two months.
Platinum is also bottoming and breaking out on an absolute basis. The weekly chart displays a breakout of a 5.5-year base.
This base building comes as the 14-period RSI, on the weekly- scale, has struggled to post a reading greater than 70.
The daily chart brings the breakout into focus, however presents a different picture in terms of momentum. Unlike the weekly chart, the 14-period RSI on the daily-scale has remained in a bullish regime since May 2020.
Another important aspect of the daily chart is some of the wicks, or spindles, associated with recent candles. They are massive, showcasing intraday volatility and the difficulty in managing risk.
This makes it extremely difficult to trade, but there is a lot of overhead space providing the possibility of future opportunities.
Regardless of whether we plan on trading Platinum or not, this laggard provides plenty of valuable information.
Platinum relative to Gold recently reached a historic low.
Platinum spent most of 2020 in a bottoming process relative to Gold and has begun to outperform over the last two months.
Platinum recently broke out of massive bases on both the weekly and daily charts.
All of the above observations add up to emergent strength in the laggard. This might be the most important piece of information.
If the serial underperformer is catching a bid relative to its closest peer, as well as on an absolute basis, then that speaks to strength in the entire precious metals space. It depicts an environment that can be characterized as an incoming tide, lifting all boats.
After years of being overlooked in favor of Gold, is it time for Platinum to finally shine?
Thanks for reading! If you have any questions or comments, please feel free to contact me at ianculley@culleycharts.com
DISCLAIMER: All information and opinions expressed by Culley Charts are strictly that, and should not be construed as investment advice. Market participation comes with inherent risk, and the responsibility of managing this risk lies solely with each individual investor.
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