By: Willem_Weytjens
Historically,
precious metals (such as Gold & Silver for example) had an
important role as currency, but are now regarded mainly as investment
and industrial commodities. Gold, silver, platinum, and palladium each
have an ISO 4217 currency code.With the ongoing crises in the Western World, precious metals are
regaining their role as "currency", as they cannot be printed out of
thin air unlike fiat money.
The best-known precious metals are the coinage metals gold and silver. While both have industrial uses, they are better known for their uses in art, jewellery and coinage. Other precious metals include the platinum group metals: ruthenium, rhodium, palladium, osmium, iridium, and platinum, of which platinum is the most widely traded. The demand for precious metals is driven not only by their practical use, but also by their role as investments and a store of value. Historically, precious metals have commanded much higher prices than common industrial metals.
These days, gold is trading near all-time highs, while platinum is trading about $700 below its all-time high reached in 2008. Since 1972, Platinum traded at about 1.35 times the price of Gold on
average. Right now, Platinum is even cheaper than gold, trading at
only 0.92 times the price of Gold. As we can see in the chart below,
this is a rather "rare" situation. It only happened in the early 80′s
and for a short time in 1974. In 1972, 2000 and 2008, it even traded
as much as 2.30 times the price of Gold (monthly basis).
Based on this ratio over the last 40 years, we can say that Platinum is "cheap" relative to Gold.
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