Costco Marks the Bottom – Is Platinum About to Shine?
A low frequency but juicy strategy where the edge is government incompetence.
Let’s dig in…
You all know we remain commodity bulls and have beaten a dead horse on gold since we got interested in it again in Q3 of 2023. As the world enters chaos with DMs becoming EMs, gold should remain relatively bid. And with silver finally waking up, its worth moving through the family tree over to PGMs as well, especially after Costco announced this week its selling Platinum PAMP bars. Again we are fund flows kinda guys, and we get even more interested when retail army joins a reflexive party. We saw COST time the gold party beautifully in summer 2023 just prior to the rip-roaring breakout. And with platinum investment demand only a few hundred K OZs Costco may be marking the lows here too…
30yr PLAT
MSCI Emerging Market (white) and PLAT (green)
Meanwhile the plat to gold ratio has never been lower…won’t be long until retail gold stackers start yelling gold is too damn high and we get a bit of rotation…
PLAT to gold ratio
We obviously don’t love the industrial aspect of plat during chaos, but EM demand for autos (see KEDM issue 154 – RoRos) and demand for hard assets in inflation may lift this all the same. Even without factoring a non-zero risk of a sizeable spike in investment demand, the supply/demand of platinum looks skewed. And this doesn’t even factor in a non-zero risk of an unexpected supply issue in S. Africa, Russia or Zim….
WIPC Quarterly Presentation. Worth a skim
We have been hearing about the platinum bull case for years now (no, buying SBSW is not unique or contrarian…looking at you Fintwit) but the timing of the underlying was off. With hard assets finally seeing an inflection in fund flows, and retail slowly joining the party, we are adding platinum to our blotter and our interest is finally piqued…
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