Platinum vs Gold

[jbtrader]

 

The Platinum price has fallen 12 of the last 13 days

Gold has also fallen off the proverbial cliff since tracing out a weekly reversal (see my previous post re: Gold)

While both seem very oversold now I feel a better trade exists looking at the Gold/Platinum ratio.

 

The ratio between Gold and Platinum during this recent period has fallen sharply.

It is currently just above .81

That is it takes just over .81 of an ounce of Gold to Buy an ounce of Platinum. 

I think this is overdone and believe Platinum will close this gap from here.

As such I am Buying Platinum and selling Gold expecting this ratio will climb.

I am putting a stop at .78

 

What do you think guys?

 

Cheers,

 

JB.

[Guest Zero]

Interesting.  I wonder what the average ratio is, if you know?  Like is it normally 55 and now at 81? 

[jbtrader]

In recent times the average as been closer to 1.

Fridays action suggests I am a bit early in this trade.

Hopefully it turns around before I get stopped out.

Down to .8 now

.78 is my stop on a closing basis.

 

Cheers,

 

JB.

[Guest Zero]

Hi 

 

Hopefully you avoided that stop - I see gold has put in a decent rally over my session, which might be a positive. 

I can see the thinking behind your strategy, especially with gold getting a bit of a hiding recently - hope it goes well.

[jbtrader]

Thanks Zero.

I havent been too close to the stop yet.

I gave it a pretty wide berth.

Some catching up to do though.

 

I thought Platinum would be up last night but it was Gold that fell back.

 

Cheers,

 

JB.

[jbtrader]

I entered the trade with Platinum at .82 of Gold.

It is now at .80

While I am unhappy to be behind in the trade I will let it run.

My stop is .78 on a closing basis.

 

Cheers,

 

JB.

[jbtrader]

The ratio is currently .796

It has been as low as .784

My stop is .78 on a closing basis.

I still believe this trade can work out but it's obviously a worry how fast it has fallen.

 

Cheers,

 

JB.

[Guest Zero]

Hi jb,

 

Don't let me corrupt your successful strategies/MM - but does this trade need a stop?  I can imagine that, given time, it should come good.  Easier for me to say as I guess you've done all the hard work for us, and if we get in now we'd have more room to play. 

 

I can imagine, as a sort of hedge trade, they'd stay in their current correlation until one breaks out (as you've predicted) and then things will change quickly as the correlation changes.  Hang in there anyway... 

[jbtrader]

The trade has certainly turned for the better in the last few days.

 

HOWEVER - Gold and Platinum both reversed to the upside on a weekly basis last week after the move we saw on friday.

 

As such I am keeping the long on Platinum but I can't stay short Gold given the technical move.

 

 

Cheers,

 

JB.