Platinum has been on a tear in recent months. The metal recently hit a decade-plus high. And it has everything to do with... gold?
Editor's note: If you've been following along with the Chaikin PowerFeed, you'll recall we shared an essay from our friend Sean Michael Cummings last month on a promising setup in platinum. Sean is an analyst at our corporate affiliate Stansberry Research. And another one of his Stansberry colleagues has also noticed something unusual happening with platinum... Today, Brett Eversole has the details. This essay from the July 1 edition of his free DailyWealth e-letter discusses an uncertain outcome for platinum after the recent rare surge higher...
What's on the Horizon After Platinum's Rally
By Brett Eversole, editor, Stansberry Research
Platinum has been on a tear in recent months. The metal recently hit a decade-plus high. And it has everything to do with... gold? In a surprising twist, soaring gold prices have caused a spike in platinum demand. That, in turn, has caused a spike in platinum prices. The metal is up nearly 50% this year... roughly double the return of gold. And the rally included a rare 10-week stretch of profits. The massive surge has a clear explanation. But according to history, the outcome from here is uncertain... with either big gains or big losses on the horizon. Let me explain...
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Platinum Is in Demand... And Soaring
Platinum's recent rise is an interesting phenomenon. The metal soared 33% over a recent 10-week stretch. That's one of the largest 10-week rallies in its history. And it happened because of China's new gold problem... You see, as gold prices soar, Chinese jewelers are turning to platinum. It's more affordable after gold's massive surge over the past few years. The country has been importing huge amounts of platinum in recent months. This new and unexpected uptick in demand has helped catapult prices higher. Again, platinum jumped 33% in just 10 weeks. Take a look...
Platinum was trading sideways for most of the past year. Then, beginning in early April, it began to soar. This kind of rally is far from common. There have only been three other periods where platinum saw similar rallies over 10 weeks. And as the table below shows, what happened next was a major split...
Usually, we'd expect a big short-term rally to indicate a powerful uptrend. And when a powerful uptrend is in place, the gains tend to keep going. That can be true for platinum. But as our first case shows, this kind of major short-term rally is sometimes unsustainable... And it can collapse catastrophically. In 2008, the rally continued in the short term. The metal was up 10% over the next three months. Then, the bottom dropped out... with a one-year loss of 47%. The other two past instances were much better. The strong trend did hold up in those cases. Platinum kept soaring, rallying 40%-plus in a year both times. So, what can we expect today? History isn't clear this time. But gold's big rally is driving this new demand for platinum... And as I explained to DailyWealth readers on June 30, higher gold prices are still likely from here. That means this trend should continue for platinum. And if that's the case, a major crash isn't likely. Instead, the massive rally we just saw could be only the beginning, with much higher platinum prices on the way. Good investing, Brett Eversole
Editor's note: In DailyWealth, Brett and his Stansberry colleagues share insights on the day-to-day opportunities they see in the markets. And they share strategies to help readers safely – and steadily – build a lifetime of wealth. Just like the PowerFeed, DailyWealth publishes in the morning each weekday the markets are open. And it's free to read. Learn how to sign up to receive DailyWealth by clicking here.
Market View
Major Indexes and Notable Sectors
# Hld: Bullish Neutral Bearish
Dow 30
-0.91%
11
14
5
S&P 500
-0.75%
126
269
104
Nasdaq
-0.75%
31
54
16
Small Caps
-1.5%
641
892
345
Bonds
-0.95%
— According to the Chaikin Power Bar, Small Cap stocks and Large Cap stocks are Bullish. Major indexes are mixed.
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Sector movement over the last 5 days
Materials
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+0.43%
Real Estate
+0.14%
Health Care
-0.32%
Communication
-1.41%
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Industry Focus
Oil & Gas Exploration & Production Services
9
29
15
Over the past 6 months, the Oil & Gas Exploration & Production subsector (XOP) has underperformed the S&P 500 by -12.03%. Its Power Bar ratio, which measures future potential, is Weak, with more Bearish than Bullish stocks. It is currently ranked #15 of 21 subsectors and has moved up 1 slot over the past week.
Indicative Stocks
CNX
CNX Resources Corpor
VTS
Vitesse Energy, Inc.
KOS
Kosmos Energy Ltd.
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Top Movers
Gainers
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PLTR
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Losers
TSLA
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BG
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FSLR
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BAX
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LULU
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Earnings Surprises
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