Platinum: Has the Time Come to Sell?

With gold breaking the $1,000 barrier, silver riding at a ten-year high and precious metals up across the board, the question has to be asked - is it now time to sell platinum?

Between 1992 and 1999, platinum languished around the $400 per ounce mark but with the advent of the new millennium, platinum commenced its inexorable rise, initially due to demand in the electronics sector we all wanted to get in on the internet bubble which in turn fuelled PC and laptop demand, and as that bubble burst in 2001, so did the price of platinum. Then the warning bells sounded over economic performance and from the $400 level in January 2001, platinum peaked at almost $2,200 in early 2008 and drastically fell back to $800 by the end of the year - Obama was elected and a $700 billion stimulus plan from the US alone was promised as an injection into the economy, primarily the banking sector.

This directly led to the huge drop in platinum prices seen in the opening days of 2009 - such a capital injection from the US taxpayer was almost unprecedented and more than this, taxpayers around the world in developed countries were finding similarly large amounts of taxpayer cash was being pumped into the global financial system to keep the global economy afloat. He initial reaction of metal speculators, particularly those looking at platinum and precious metals as a safe haven in the very harsh economy, suddenly saw some light at the end of the tunnel - demand for platinum dropped and dropped like the proverbial rock.

Since this platinum crash, the spot price has steadily recovered to where it is now (September 2009) trading at around the $1,250 mark - a far cry from the dizzying heights of $2,200 but nevertheless a remarkable recovery from the low of $800.

He burning issue is whether the price is going to recover further - and that really depends on your view as to whether the economy is going to turn the corner and recovery commences or not. More particularly, it is going to depend on stock and bond market performance - if they demonstrate recovery, the professional investor is going to drop their precious metal holdings and liquidate to invest in those markets in order to take advantage of market recovery. A close eye needs to be kept on earnings and profit performances and especially whether they are coming at the level of, or better than analyst expectations.

A good guide is the hedge fund market - where many have laid the blame for the current economic malaise. For the year to date, the KDY-index has returned in excess of 17% from the basket of hedge funds it tracks - that's good news for those looking for super-bonuses and for those looking for recovery.

It is very bad news for those looking for future platinum value increases and signals that the time to sell has definitely arrived - for further proof, look at how the value of platinum has hit a plateau and is rebounding off the $1,200 price ceiling - speculators and traders simply don't know which way they should be going and are waiting and watching to see what will happen next - the current round of earnings results in Wall Street are primarily positive.

Platinum is not going higher - sell.