Buying Gold At A Huge Discount

Gold futures are $1537. October platinum is $940.9. 

It used to be that platinum traded at a premium to gold. Why? Much less of it... also a precious metal, an industrial metal, an investment metal, and in addition, platinum is a strategic metal. Today's platinum production, along with recycling is 8 million ounces, worth a bit north of $7 billion. Annual gold and recycling is about 150 million ounces, worth around $225 billion. 

Platinum is an extraordinarily rare metal, yet you can buy platinum at 61% of the price of gold. Platinum is such a small market that it will move, in increments that the market will find hard to understand. There is no particular reason that platinum is now at $940, not, say $1040. I am expecting multiple thousands in price.

Yes, bullish on gold as well, and feel comfortable with a $5000 price since gold is the most historically significant form of money that has proven over the centuries that it maintains its purchasing power, an important feature in the face of ever eroding currency values. $225 billion might seem like a lot, but increasing production is not so easy; central banks are big time buyers, and it is a tiny amount in the context of world currencies.

Another way of buying "gold" at a discount? Well ruthenium is not gold, but it is one of the platinum group metals (PGMs), a term referring to the rarest and most essential elements on earth, comprising platinum, palladium, rhodium, iridium, ruthenium and osmium. 

So while ruthenium is not gold, it is as good as gold, and in my book, actually much better. Yes, I am long, in physical form, a position in ruthenium, a metal with world production and recycling of around 1 million ounces, and thus a market cap of about $250 million. Ruthenium has remarkable catalytic properties, and is heavily used in the high tech industry. Owning ruthenium and indeed any of the platinum group metals is essentially holding an option on future use discoveries, given the always new applications, some highly significant, that seem to develop over time, without alternatives that function as well. Sure, ruthenium is a very thinly traded market, one that is entirely professional, but a market that is stupidly cheap. Really? One of the rarest and most critical elements on the planet and all of the annual supply is worth only $250 million? Ruthenium will double and double again.

And rhodium? Another PGM now at $4850 an ounce, on its way to its old high of $8000, then $10k, $12k, and ultimately $20,000. An essential metal in catalytic converters, without a substitute.

As much as these numbers sound aggressive, look at all of the stocks that have gone up 4x, or 10x or 20+ times. It is really very simple. The platinum group metals are extremely rare and essential, and, essentially, without substitute. Watch from the sidelines, or get on board. FYI, I am long platinum, palladium, ruthenium, gold, and silver.



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