Gold is living a golden moment, while investors care about the escalation of prices and the stability of the dollar. Adjusted to inflation, gold has exceeded its maximum of 1980, after which its nominal value was reduced for almost two decades. The precious metal now quotes more than three standard deviations above its long -term trend. Although it has preserved its purchasing power for several millennia, it has proven to be a relatively poor coverage against short -term inflation. After an increase of 25% this year, it has never seemed so expensive, both in real terms and in relation to other raw materials.
“The real price of gold,” writes Campbell Harvey, of Research Affiliates, “resembles the price-benefit ratio of the shares. Very high price-benefit relationships are usually followed by low expected yields. The history of gold suggests a similar pattern.” Since 1975, investors who acquired gold at high prices lost money during the following decade. On the contrary, buying gold when it was relatively cheap provided positive yields adjusted to inflation.
Today, its price is very outdated with respect to other raw materials. During the last half century, an ounce of gold has cost, on average, 21 times the price of a barrel of oil. At present, the relationship between gold and oil is greater than 50 times, its highest level ever registered, except for a brief moment in 2020. Gold also seems expensive compared to silver. Since 1975, 60 ounces of silver could be changed to an ounce of gold. Today, gold is worth about 100 times more than its cheap – cousin.
There is another precious metal that seems even less expensive. Platinum may not have the attractiveness of gold, but it is much more difficult to find. world production is mainly concentrated in deep mines located in a small region in southern Africa. This metal has experienced a roller coaster in recent years. In the first decade of the century, he was involved in the mining supercycle, when he experienced an boom and then collapsed. The mining production was interrupted during the pandemic, after which the platinum rose above $ 1,200 the ounce in the spring of 2021. Since then, it has fallen below $ 1,000. In real terms, it lies 25% below its average of the last 50 years.
Since 1900, its price has remained stable in relation to gold, according to Bryan Taylor, chief economist of Finaeon (formerly Global Financial Data). During the last 50 years, the relationship between the two has been, on average, approximately one by one. However, since 2015, gold has advanced and now quotes triple the platinum. This has never been so cheap in relation to gold.
The meaning of these comparisons is a matter of opinion. After all, many consider that gold is an alternative to the unstable fiduciary currencies. Although silver and platinum are officially designated as monetary metals, they lack the strong brand of their yellow rival.
The successive presidents of the United States have threatened to undermine the current international monetary system dominated by the dollar. After the country and its allies freezed Russia’s foreign exchange reserves in 2022, China and other central banks intensified their gold purchases. On several previous occasions, when international monetary regimes collapsed, gold suffered a paradigm shift.
Precedent
For example, when the gold pattern collapsed in the early 1930s, its official price rose from $ 20.67 per ounce to 35. After the collapse of the fixed exchange rate system of Bretton Woods, established after World War II, at the end of the 60, the gold became extremely volatile, but stabilized at a higher average price, in real terms. If we look further back in history, the demonetization of silver in Western industrial economies during the second half of the 19th century permanently reduced its market value in relation to gold.
This could be found in the early stages of another paradigm shift. In addition, while yellow metal benefits from economic uncertainty, industrial raw materials are vulnerable to a world recession. At the beginning of pandemic, oil futures briefly recorded negative values. Approximately half of the annual silver production is used for industrial applications, while three quarters of platinum demand come from users also industrial. If the world economy enters recession, these raw materials will undoubtedly be affected.
There is another threat to consider. The so -called Platinum group, which include the paladium and the rhodium, are highly appreciated for their ability to withstand high temperatures. About 44% of platinum production is used in catalytic converters for cars that reduce pollution produced by internal combustion engines. The governmental objectives of putting an end to the sale of traditional motor vehicles threaten the long -term demand for oil and platinum and its related metals, which are not used in battery -powered electric vehicles.
However, outside China, the rapid advance of the electric has stagnated. In 2024, the German government ended subsidies for the purchase of these models. Donald Trump has ruled out the objective of his predecessor that half of car sales in the US are electric for 2030. Plug -in hybrids have gained market share. These use more platinum group metals than gasoline and diesel. UBS, which last year reduced its global penetration forecast of battery models by 2030 from 50% to 40%, expects the demand for metals of the platinum group to remain stable in the medium term. Impala Platinum, one of the largest miners in this metal, reports a “solid” demand by its client base. On the other hand, the supply of these rare metals is increasingly limited.
According to Django Davidson, from Hushing Partners, in recent years platinum miners have invested very little. They have few incentives to do so, since many of their operations are not profitable at current market prices. The World Investment Council in Platino states that the supply of this metal will be 17% lower than demand in 2024, and provides that the offer deficit will continue in the coming years.
The recent parabolic evolution of prices suggests that gold could be in a bubble. Speculators can continue winning in the short term. But investors looking to protect their assets should eventually look for other alternatives. Compared to gold, oil and silver seem extremely cheap. You could say that platinum is in an antiburbuja. Depressed both in price and offer, this scarce metal seems a better value deposit than what John Maynard Keynes famously called “Bárbara Reliquia.”
The authors are columnists of Reuters Breakingviews. Opinions are yours. The translation, of Carlos Gómez belowis the responsibility of Fifodies
