Tuesday, January 24, 2012

Why Gold is More Expensive than Platinum?

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DG365FD46564GFH654FU898 In recent months there has been a near paradigm shift in the precious metals market that goes against basic market analysis of supply and demand. I’m referring to the recent change in which gold price became higher than the price of platinum. This shift occurred during October 2011 and since then has proceeded with no clear end in sight. Currently, gold price is near $1,664 per ounce, and platinum price is at $1,530 per ounce, i.e. gold is nearly 8.7% more expansive than platinum. The chart above presents the development of gold and platinum during 2011 and 2012 up to date. It shows that during most of the year platinum was more expansive than gold; this makes sense because platinum is much less common than gold. According to several sources the worldwide supply for platinum reached in 2010 188.5 tonnes, while the global gold supply was 4,162 tonnes. Since both metals are linked for being precious metals, it’s no surprise that their linear correlation between their prices was strong and positive. The chart below shows the moving linear correlation between gold and platinum (daily percent changes) during 2011 and 2012. The chart clearly shows very strong and positive correlation during



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