As platinum rises, it seems some sub­sti­tu­tion is start­ing to oc­cur

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As platinum rises, it seems some sub­sti­tu­tion is start­ing to oc­cur

The prices of platinum and pal­la­dium have di­verged con­sid­er­ably over re­cent years. Platinum peaked at $2,200 in 2008 and dropped to be­low $800 re­cently. Pal­la­dium bot­tomed out in 2008 at about $160 and has re­cently reached a peak of $1,540.

The price of pal­la­dium has surged over the past eight months. In Au­gust 2018, it was near $800 an ounce. The near dou­bling of the price since then has grabbed head­lines. But the noise is of­ten the loud­est at the ex­tremes, and the hype over pal­la­dium when it was around $1,500 was no ex­cep­tion.

That was what drove some to sug­gest that pal­la­dium was a bub­ble wait­ing to pop. The most no­table of these was An­glo Amer­i­can CEO Mark Cu­ti­fani, who made a pass­ing re­mark in mid-March that pal­la­dium was an un­sus­tain­able bub­ble. When the CEO of a min­ing house that pro­duces the stuff sug­gests it is a bub­ble, it’s worth lis­ten­ing and it seems the mar­ket did ex­actly that.

The words were barely out of Cu­ti­fani’s mouth when the pal­la­dium price plunged more than $200 in a week. That sell­off has done tech­ni­cal dam­age to the pal­la­dium price chart re­cently and most likely sets in mo­tion a pe­riod of con­sol­i­da­tion in the price that may last months. The break be­low $1,500 for pal­la­dium ends the steep up­ward trend that had been in place since Au­gust, just after the blow-off move to the

up­side. When a trend steep­ens and steep­ens as had been the case with pal­la­dium, the first crack to the down­side is usu­ally vi­o­lent, then fur­ther grad­ual weak­ness fol­lows. Any burst­ing bub­ble ex­hibits these char­ac­ter­is­tics. So if pal­la­dium fol­lows that path, fur­ther grad­ual weak­ness in the price is likely in the com­ing months.

While the pal­la­dium bub­ble has been burst­ing, platinum seems to have sprung to life. This prompts the ques­tion whether some sub­sti­tu­tion between these two platinum group met­als is start­ing.

The price of platinum had been in the dol­drums, be­low $880 re­sis­tance, for most of the past year. Sev­eral at­tempts to break above $880 had been un­suc­cess­ful in re­cent months. But a base was form­ing. Higher lows since Au­gust had be­gun to in­di­cate that the price was bot­tom­ing out and building a stage from which it would even­tu­ally break higher.

The break above the down­trend and above the 200 dis­placed mov­ing av­er­age at $830 in Fe­bru­ary was the first sign that buy­ers were start­ing to step up. Soon after, the 50-day mov­ing av­er­age crossed above the 200-day mov­ing av­er­age to mark a golden cross buy sig­nal. In April the price has bro­ken above the $880 re­sis­tance level con­vinc­ingly. That break above lat­eral re­sis­tance at $880 con­firms that the low is prob­a­bly in for platinum and there is likely to be fur­ther up­side in the com­ing months.

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