Live Metal Prices / oz
Gold: 1513.02 USD
Silver: 17.08 USD
Platinum: 850.50 USD
Palladium: 1439.00 USD
Rhodium: 3885.00 USD

The Decade of Gold and Palladium

The financial world, there is no lack of ratios.  Financiers have come up with ratios such as the P/E ratio (which is the price of a stock relative to its ratio), the bid to cover ratio (which is the number of bids for an asset divided by the amount sold), the return on assets ratio (the dollar return of an asset divided by the book assets of a publicly traded company), and the earnings per share ratio (which is the earnings reported by the company relative to the total number of outstanding shares).  These four are only the tip of the iceberg for financial ratios.  Analysts have thought up thousands, if not millions, of ratios related to profitability, efficiency, liquidity, and many others.

Three ratios are covered here.  The ratios are the ratio of the price of silver to the price of gold, the ratio of the price of platinum to the price of gold, and the ratio of the price of palladium to the price of gold.  These three ratios have the price of gold in the bottom part of the fraction, meaning that they are all testing how the price of gold is performing relative to all the other prices.  

A look at the ratios follows.  Before looking, remember that an increase in the ratio means that gold is becoming less valuable relative to silver or platinum or palladium.  A decrease in ratio means the opposite.

The Price of Silver to the Price of Gold Ratio
The first ratio below is the silver/gold ratio.  Surprisingly (at least to the non-observer), the ratio has been trending down since mid-2011 when it peaked at over $0.03.  There were many short periods where silver did better than gold, such as 2016, but in general the price of gold has consistently been growing faster than the price of silver.

At the end of the first week of June, the figure stood at $0.011.  This is eerily close to the all-time low the silver/gold ratio experienced back in February 1991.  After being so low in the winter of 1991, the price of silver rose quickly.  The ratio rose to $0.025 on February 6, 1998.  This note begs the question as to whether the silver/gold ratio is due for a repeat?   

The Price of Platinum to the Price of Gold Ratio
The second ratio addressed is the platinum/gold ratio.  Very similar to the silver/gold ratio, the platinum/gold ratio has been trending down since mid-2014.  The end of the first week of June saw the figure at $0.6011.  This means that, relative to gold, platinum lost 50 percent of its value since June 11, 2014 when it peaked at $1.1751.  

Interestingly, platinum has traditionally traded at a higher premium throughout the ratio history.  That switched in the mid-2010s.  This ratio and the previous silver/gold ratio may make one wonder whether the world is experiencing the decade of gold.  

 

The Price of Palladium to the Price Gold Ratio
The third chart is the price of palladium relative to the price of gold.  Curiously, a much different picture emerges.  Platinum has done quite well relative to gold even though gold has done well.  

On February 25, 2016, the ratio of the price of palladium to the price of gold stood at $0.3942.  The ratio has since ballooned to $1.0033.  Very healthy for palladium.  Interestingly, this is still well below the all-time high of $4.115 on January 26, 2011.

Without question, the past few years have been good years for holders of palladium.