Platinum Dives to 5-Year Low, Global Uncertainty Produces No Rise in Precious Metals

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For more than a year, you must have heard hundreds of analysts arguing that investors were moving money into precious metals and that global economic uncertainty would push these metals higher. Well, that hasn’t happened.

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If we look back in time, periods of economic concern do not always translate into higher rising precious metals price. Furthermore, the market is just fine in spite of all the economic news that keep coming up talking about global economic concerns. Market indexes such as the Dow Jones Industrial Average and the S&P 500 recently made all-times high and that is certainly not a sign of economic difficulty. It at least shows that investors (those that make prices move) are not that pessimistic about the economy.

It’s always better to rely on facts and not on news. The facts speak for themselves: commodities are falling and the US dollar keeps rising. The recent continuous lack of investor appetite for precious metals doesn’t come as a surprise. We commented in October that the outlook for precious metals wasn’t good. Today, the picture doesn’t look any better:

Platinum price since 2011

Platinum price since 2011. Source: MetalMiner.

Platinum is at its lowest level since 2009. Some people say that prices are falling because of concerns that the falling European currency could hurt demand from the European automotive sector which accounts for 20% of annual platinum consumption. Still, we don’t know if that’s the case as automotive demand has indeed improved…

Regarding gold and silver, we already mentioned last month that both are still in bearish territory despite limited price momentum 0bserved in January. In February both precious metals fell and are now near record lows again.

The only precious metal that deserves some credit is palladium, which is holding well at $808/oz. As we commented in October: “The only precious metal that our readers should be concerned about at this point is palladium. The rest of them, keep falling and the sentiment is bearish until things change.”

Nothing has really changed.

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