Turn to Shine
by Don Vialoux
The outlook for
platinum is improving. Thackray's 2009
Investor's Guide notes that
platinum has a
period of seasonal strength from the end of
December to the end of May. The trade has been
profitable in 17 of the past 22 periods; the
average gain per period was 8.3%.
In contrast, the average gain for gold during
the same period was only 0.9%.
Technical prospects for
Platinum have turned
positive. A strong recovery rally is due.
Platinum fell 67% from its high at US$2,299 per
ounce in February to its low at $752.10 in
Platinum recently broke above a double bottom
pattern on a move above resistance at US$896 and
has established an intermediate uptrend. Next
intermediate technical target is US$1,200.
The chart shows the optimal entry points over
the past seven years.
Other precious metals (gold, silver, palladium)
also have developed positive intermediate
Platinum will "piggy back"
on their strength into spring.
Fundamental prospects for
Platinum are just
starting to turn positive. Demand for
mainly comes from jewellery (40% of demand) and
catalytic converters used in the auto industry
The main reason for the price decline during the
past year has been a drop in demand for
used in catalytic converters. U. S. auto sales
virtually collapsed but the low point appears to
have been reached. Canadian and U. S. government
support of the auto industry will kick-start
demand for autos in the first quarter of 2009.
Platinum by the auto industry will
recover as the year progresses. Meanwhile,
Platinum for jewellery purposes has
started to recover due to its current low price
relative to gold.
A direct way to invest in
Platinum for the
current period of seasonal strength is to own iPath
Platinum Exchange Traded Notes (PGM/
NYSE). Technicals on PGM are almost identical to
technicals for the commodity.
Platinum equities also are available; consult
your advisor for specific recommendations. But
avoid junior non-producing companies in the
--- - Don Vialoux, chartered market technician,
is the author of a free daily report on equity
markets, sectors, commodities, equities and
exchange-traded funds. Reports are available at
www.timingthemarket.ca. Mr. Vialoux does not own
Platinum ETFs or stocks mentioned in this
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