I may get this partially wrong, but it'll be enough for you to Google it out: platinum and palladium are in the PMG of metals, but they were never "money". While platinum used to be priced higher then gold, it was because that was the metal used to make catalytic converters for diesel engines...but when the EU came out in 2011 (or 12?) and said they would switch from diesel to unleaded engines as their primary ICE, that's when you saw platinum's use-case diminish, and palladium's use-case explode...thus the plunge in platinum's price and the explosion in palladium. I hope that helps!
May be confirmation bias on my part but I believe your explanation of gold is spot on. The US freezing of Russian assets is causing the CBs to reverse events that caused the Brown bottom.
As an industrial metal, Platinum has been in surplus since EU switched from diesel engines which then boosted Palladium prices, as the main catalytic converter metal. Now that EV is the new driver, Palladium has also got in surplus and hence prices tanked, along with Rhodium, etc..
That said, I agree Pt and Pd both has precious metal attributes, historically, especially given their scarcity vis-a-vis Au, but when you look in the sheer size of their market, both, comparing to Au, it is clear why Au has always been the go to metal of the humankind for thousands of years.. Market depth has always meant something, clearly.
Similar to your comparisons, if for. some reason, all DM bonds, as in US treasuries, became uninvestable, that would catapult the Au prices to insane levels, but then again, Au is nobody's liability, unlike bonds. I always think Au is cheap, as long as it is below SnP500. My lame approach.
Russell, I love your work, but this "new" theory of yours... everyone on fintwit etc has been talking about this for many months, basically since the sanctions trapped Putin's foreign reserves - it's not exactly a novel theory!
P.S. In terms of platinum vs gold, the price of a platinum Rolex has always been fairly consistently double that of a gold Rolex... Maybe a good trade to sell Pt Rolex / buy Au Rolex ;)
Great write up
I may get this partially wrong, but it'll be enough for you to Google it out: platinum and palladium are in the PMG of metals, but they were never "money". While platinum used to be priced higher then gold, it was because that was the metal used to make catalytic converters for diesel engines...but when the EU came out in 2011 (or 12?) and said they would switch from diesel to unleaded engines as their primary ICE, that's when you saw platinum's use-case diminish, and palladium's use-case explode...thus the plunge in platinum's price and the explosion in palladium. I hope that helps!
May be confirmation bias on my part but I believe your explanation of gold is spot on. The US freezing of Russian assets is causing the CBs to reverse events that caused the Brown bottom.
As an industrial metal, Platinum has been in surplus since EU switched from diesel engines which then boosted Palladium prices, as the main catalytic converter metal. Now that EV is the new driver, Palladium has also got in surplus and hence prices tanked, along with Rhodium, etc..
That said, I agree Pt and Pd both has precious metal attributes, historically, especially given their scarcity vis-a-vis Au, but when you look in the sheer size of their market, both, comparing to Au, it is clear why Au has always been the go to metal of the humankind for thousands of years.. Market depth has always meant something, clearly.
Similar to your comparisons, if for. some reason, all DM bonds, as in US treasuries, became uninvestable, that would catapult the Au prices to insane levels, but then again, Au is nobody's liability, unlike bonds. I always think Au is cheap, as long as it is below SnP500. My lame approach.
Gary gygax knew what he was talking about :)
Russell, I love your work, but this "new" theory of yours... everyone on fintwit etc has been talking about this for many months, basically since the sanctions trapped Putin's foreign reserves - it's not exactly a novel theory!
P.S. In terms of platinum vs gold, the price of a platinum Rolex has always been fairly consistently double that of a gold Rolex... Maybe a good trade to sell Pt Rolex / buy Au Rolex ;)
Think it through:
"Unfriendly" (at least to G7) cen banks sell Treasuries because they fear that they can't use them
Domestic institutions and friendly CBs can still earn the extra yield though
But if bonds sell off too violently then the banks, insurers have a solvency issue
What is the next short candidate?
It may be the wrong explanation, but I haven’t heard any better one and the price says something is going on. Price has to be respected.
I just love that you combined two of my favorite things: D&D (esp. 1st edition) and investing/finance. Well done.
USA is still buying many Russian commodities - Palladium, Platinum and Uranium - not to mention diesel fuel.
https://www.1lurer.am/en/2022/12/09/Russia-has-increased-supply-of-uranium-and-palladium-to-United-States/846974
https://www.pbs.org/newshour/show/how-russian-oil-is-reaching-the-u-s-market-through-a-loophole-in-the-embargo