In this article, World Platinum Investment Council explores the theme of Platinum’s Correlation to Gold and what this suggests for Platinum Investors.
Platinum is a precious metal that is also industrial. As an investment asset, platinum’s value is influenced by its supply demand fundamentals and also the macro trends that affect precious metals. More investors are considering platinum’s macro responses when looking for an alternative to equities; this could increase platinum investment demand.
Market view: Gold is acknowledged as the investment asset least correlated with other investment classes. It’s called a currency more often than a commodity but yet it is included in many commodity indices.
Our view: Platinum remains in lockstep with gold and consequently offers similar benefits. The sustained high correlation between the price of platinum and the price of gold since 2011 suggests that platinum offers investors an alternative investment that is ‘as good as gold’.
Many investors looking for asset classes largely to diversify risk, consider commodities or gold. Gold is included in many portfolios as a hedge against macro events, global risk, interest rates, inflation, etc., and is reliably traded on macro trends — more particularly those that directly impact the US dollar.
Platinum offers similar qualities. When (or ‘if’ as critics suggest) platinum shrugs off the negative sentiment that currently overwhelms its supply demand fundamentals, this diversifier also offers interesting upside, in our view, but remains ‘as good as gold’ until then.
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