Gold outperforms platinum
The gold-to-silver ratio is the most popular ratio among the precious metals. However, we can also link gold prices to platinum prices. Mathematically, the gold-to-platinum ratio is the price of gold divided by the price of platinum. It describes how many ounces of platinum are needed to purchase one ounce of gold, indicating the relative strength of gold prices compared to platinum prices. The indicator works just as the gold-to-silver ratio, so we will not explain its mechanics, but move straight to analysis of the long-term trends in the ratio. Let’s examine thoroughly the chart below, which presents the number of platinum ounces it took to buy a single ounce of gold since 1975 (we use futures prices, as data series of London fix for platinum is available only from 1990).
The gold-to-platinum ratio (the price of gold divided by the price of platinum, red line, right axis), the price of gold (yellow line, left axis, Comex Gold Futures, front month) and the price of platinum (blue line, left axis, Nymex platinum futures, front month) from 1975 to May 13, 2016.