Economics and Investing:

James Wesley Rawles October 24, 2012 October 24, 2012

When I last checked, spot platinum had plummeted to $1,569 per ounce, while gold was more resilient at $1,707. This disparity is attributable to the platinum price being driven by its industrial uses. (And the global industrial forecast presently looks grim.) But, as I’ve mentioned before: whenever you can buy platinum for less than the price of gold, it is a good time to diversify your holdings. (Geologically, platinum is 16 times more rare than gold, so in most years it sells for a 20% to 150% premium over gold. The times that platinum has sold for less than gold, such as 1991 and today only come rarely. A 2009 article by Eric Bolling is instructive.) We can count on the long term historic ratio being restored, eventually. The current price inversion (with platinum selling for $138 less per ounce than the price of gold) is unprecedented. My advice: If you are currently holding more than six ounces of gold, I recommend swapping half of it into 1/10th ounce or 1/4 ounce U.S. Mint-issued Statute of Liberty platinum coins that have been authenticated by PCGS or NGC. (Commonly called “slabbed” bullion coins.) If you shop around, you can probably find a coin dealer that is willing to trade straight across. (Or you can sell your gold to one dealer and immediately buy platinum Statute of Liberty coins from another.) At the far end of the global financial crisis, you’ll be able to trade back into gold or silver, and make a handsome profit. Ratio trading isn’t just for the gurus at the COMEX desks. In exceptional times like these, the little guys like us have a good opportunity. Oh, and if you plan to marry soon, buy platinum wedding bands.