“SAN FRANCISCO (MarketWatch) — Platinum costs more than gold again, a shift that reflects rising confidence in the global economy and investors’ bets the Federal Reserve is closer to ending its massive stimulus efforts.
Platinum prices settled with a premium over gold earlier this week for the first time since March 2012. As of Thursday’s futures settlement, platinum PLJ3 +0.26% cost $1,700.50 an ounce, almost $10 more than gold GCG3 +0.23% at $1,690.80 an ounce.
“Platinum’s premium (or discount) to gold offers a measure of economic confidence” because platinum is “so industrially useful, while gold is primarily a store of value,” said Adrian Ash, London-based head of research at BullionVault.
Platinum’s higher cost versus gold is a return to what had been a more normal relationship between the metals from about the mid-1990s until Sept. 2011, when gold prices started to consistently top that of platinum’s.See Commodities Corner from Sept. 2011 on gold, platinum ratio shift.
When the gold-platinum ratio is low, it points to increasing economic uncertainty and weakness worldwide, said Jan Skoyles, head of research at The Real Asset Company, a precious-metals investment platform provider.
“In 2011, we saw both the economy weakening and monetary problems increasing,” she said. “During times such as those, investors take flight into gold as it acts as a safe-haven in such situations.”
Gold is “not an industrial metal — it is money without counterparty risk and therefore is attractive in such times, unlike platinum, which reacts badly to weak economic conditions and currency issues,” said Skoyles.
Differing roles
Platinum and gold are both considered precious metals and prices often move in the same direction, but they also have very different sources of demand….”
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