Gold/platinum spread

Historically demand for platinum has been strong, but how much of that demand is continuing? Furthermore, the biggest rally in platinum came from the power crisis in Africa's biggest Platinum mines, not from demand. So those ratios need to be far more conservative than the 100%, given the 2 reasons mentioned above.

I wouldn't short gold going into a 2009 treasury market melt down. Short treasuries, go long plat/gold/dirt
 
Quote from matgallis:

I wouldn't short gold going into a 2009 treasury market melt down. Short treasuries, go long plat/gold/dirt
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so far my trade would have been a better bet. Gold is still outperforming plat
 
IMO we might see a decent spot to exit this trade in the next few weeks. Basically it has reasonable correlation with views on the economy, and right now we have a powerful short-term sentiment that the bottom is in and recovery is coming. This may well provide an impetus for economically sensitive risk assets such as commodities, of which platinum is clearly one.

The spread has now moved out to more reasonable levels in historical terms. Given the harsh recession, I would not want to bet on the spread going to "normal" levels, let alone a major move beyond normal. IMO a bit of a discount to normal levels is a decent target in today's environment.

For timing, typically large moves end - or at least temporarily pause and correct - in a bit of a spike move. If we get a couple of large up days in the gold/platinum spread, maybe to $400-500, I think that would be a good time to take profits. At $400 premium, that would be a >45% premium which is reasonable IMO. So far the spread is acting nicely but a spike move over a few days would indicate time to sell I think.
 
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