Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24
Stock Market Breadth - 24th Mar 24
Stock Market Margin Debt Indicator - 24th Mar 24
It’s Easy to Scream Stocks Bubble! - 24th Mar 24
Stocks: What to Make of All This Insider Selling- 24th Mar 24
Money Supply Continues To Fall, Economy Worsens – Investors Don’t Care - 24th Mar 24
Get an Edge in the Crypto Market with Order Flow - 24th Mar 24
US Presidential Election Cycle and Recessions - 18th Mar 24
US Recession Already Happened in 2022! - 18th Mar 24
AI can now remember everything you say - 18th Mar 24
Bitcoin Crypto Mania 2024 - MicroStrategy MSTR Blow off Top! - 14th Mar 24
Bitcoin Gravy Train Trend Forecast 2024 - 11th Mar 24
Gold and the Long-Term Inflation Cycle - 11th Mar 24
Fed’s Next Intertest Rate Move might not align with popular consensus - 11th Mar 24
Two Reasons The Fed Manipulates Interest Rates - 11th Mar 24
US Dollar Trend 2024 - 9th Mar 2024
The Bond Trade and Interest Rates - 9th Mar 2024
Investors Don’t Believe the Gold Rally, Still Prefer General Stocks - 9th Mar 2024
Paper Gold Vs. Real Gold: It's Important to Know the Difference - 9th Mar 2024
Stocks: What This "Record Extreme" Indicator May Be Signaling - 9th Mar 2024
My 3 Favorite Trade Setups - Elliott Wave Course - 9th Mar 2024
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Precious Metal 10%-Plus Correction Starts Today

Commodities / Platinum Oct 16, 2012 - 12:59 PM GMT

By: DailyWealth

Commodities

Best Financial Markets Analysis ArticleBrett Eversole writes: In the Bernanke Asset Bubble, precious metals WILL be the ultimate winner.

But everyone already knows that...

And that's actually becoming a real problem, as I'll explain today. In short, based on history, it could mean a double-digit percentage fall in the price of platinum...



While I believe precious metals in general are headed higher over the long run, I'm in no hurry to buy metals like platinum today. It could fall by 10% or more in the next two months. Let me explain...

Precious metals have soared in the past two months. Platinum, in particular, has jumped from below $1,400 per ounce to near $1,700 in just the last two months alone.

It has soared in part because of the Bernanke Asset Bubble.

As my colleague Steve Sjuggerud explained last month...

The basic idea is that [Federal Reserve Chairman Ben Bernanke] will keep interest rates lower than anyone can imagine, for longer than anyone can imagine... and that will cause asset prices to soar. That includes stocks... as well as real estate and precious metals.

Everyone knows platinum (and other precious metals) could soar from here. And that's the problem... Everyone already knows, so everyone has already bought.

At this moment, there's nobody left to buy – there's nobody left to push the price of precious metals up right this second. So the risk is on the downside now.

Platinum is the most extreme example. Investors are far more bullish on platinum now than any other time in history.... And based on history, this condition could lead to a 10%-plus fall in prices over the next two months.

It's easy to see in this chart:



The blue line represents bets made by platinum futures traders. When the line is high, traders expect higher platinum prices. And when the blue line peaks, platinum prices tend to fall.

As you can see, traders are more bullish today than ever before. The numbers have blown through the past highs.

As I said earlier, traders are so bullish right now, everyone who wants in on this trade is already in. There are no more buyers. What's more, all those buyers will have to close out their positions at some point. And when that happens, platinum prices can (and do) crash.

That's exactly what happened the last five times platinum prices peaked. Take a look...

On average, platinum fell 13% in just two months after sentiment peaked. But sentiment is so high today, things could get much worse...

Platinum recently hit a new high. Meanwhile, demand might be falling...

The metal's main industrial use is in cars. Asia is a major global car market. (In September, China's auto sales were 35% higher than in the U.S.) But on Friday, the International Monetary Fund cut its outlook for economic growth in Asia.

Because traders are at such a bullish extreme today... and because of weakening demand for platinum in cars, I believe platinum is ripe for a pullback over the next few months.

Of course, this doesn't HAVE to happen...

As I explained last month, sentiment highs don't always mean a crash in prices. But in this case, I think more downside is a very real possibility.

And while platinum is the most extreme case, you can find extreme optimism in all precious metals today. Gold, silver, and palladium are all hitting new highs in sentiment.

Over the long term, I'm still bullish about precious metals – platinum included. As the Fed continues to print money, precious metals (and other assets) could soar higher than anyone believes is possible.

But investors should avoid buying precious metals today. In the case of platinum, we could easily see a 10%-plus fall over the next few months.

Good investing,

Brett Eversole

http://www.dailywealth.com

The DailyWealth Investment Philosophy: In a nutshell, my investment philosophy is this: Buy things of extraordinary value at a time when nobody else wants them. Then sell when people are willing to pay any price. You see, at DailyWealth, we believe most investors take way too much risk. Our mission is to show you how to avoid risky investments, and how to avoid what the average investor is doing. I believe that you can make a lot of money – and do it safely – by simply doing the opposite of what is most popular.

Customer Service: 1-888-261-2693 – Copyright 2011 Stansberry & Associates Investment Research. All Rights Reserved. Protected by copyright laws of the United States and international treaties. This e-letter may only be used pursuant to the subscription agreement and any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), in whole or in part, is strictly prohibited without the express written permission of Stansberry & Associates Investment Research, LLC. 1217 Saint Paul Street, Baltimore MD 21202

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Daily Wealth Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in