Platinum will likely be mildly bullish in 2020 but wildly bullish in 2021 and 2022
Our annual platinum price forecast is one of those important forecasts because of the upside potential of this grey metal. According to our platinum forecast we expect a bullish breakout between 2020 and 2022. Platinum’s price ultimately has an upside potential of 80% ($1800/oz) and a base case bullish upside of 30% ($1350/oz). These forecasted price targets will likely be met in 2021 or 2022. The prerequisite is that platinum has to cross $1100/oz. Our 2020 forecast for platinum is mildly bullish while our 2021 forecast (going into 2022) is wildly bullish. We consider this platinum price forecast to be one of the must read forecasts of InvestingHaven’s research.
As per Tsaklanos his 1/99 Investing Principles it is only 1% of the time that platinum is wildly bullish. So this platinum prediction is all about trying to understand that next big move. We want to know when it may happen and how to recognize it. The goals is to catch the first next big move in platinum’s price.
Why This Platinum Price Prediction?
What we are really (only) interested in is this to catch these major moves in platinum. We are talking the type of move that makes your platinum investment a multi bagger in 6 months time. That’s the only reason why we do this research, and why we publish this platinum price prediction.
Based on the elements in this article we conclude that the likelihood in which platinum will make a major move is increasing significantly.
Our Platinum Price Forecast for 2020 and 2021
Let’s start with our conclusion. Readers who don’t want to understand our underlying forecasting method can ignore the rest of the article.
One major conclusion is that platinum usually moves up strongly when silver is in a tactical or secular bull market. Sometimes silver rallies first, sometimes it is platinum that goes first. Either way those few really big platinum moves occur at times when silver has varying degrees of bullish momentum.
One other leading indicator, platinum’s COT report as per platinum’s futures market, suggests there is no major peak right now.
That said, when it comes to platinum’s chart pattern(s) we see that platinum is nearing the apex of a giant triangle pattern. The odds favor a bullish breakout which would bring the price of platinum to $1350/oz, and ultimately to $1800/oz.
This bullish scenario becomes invalidate once platinum falls below $780 for 3 consecutive months. This probability is very low!
The million dollar question is when this bullish breakout with an 80% upside potential may start? We believe this may happen in 2021. However, depending on how bullish silver becomes and how platinum will react once it rises to the $1100/oz area this breakout might already start in 2020. The line in the sand for platinum is $1100/oz.
Our Platinum Price Forecast for 2020 and 2021
Based on the leading indicators (or lack thereof) and more importantly the chart setup we see the following platinum price forecast for 2020 and 2021. This is our forecasted platinum price for the coming years. Prices reflect platinum’s spot price.
| Year | Platinum price forecast | Conditions | Invalid |
|---|---|---|---|
| 2020 | Mildly bullish | Within its triangle chart pattern | If plat breaks below $780 |
| 2021 | Wildly bullish | Breaks out of its triangle chart pattern | If plat breaks below $780 |
| 2022 | Wildly bullish | Breaks out of its triangle chart pattern | If plat breaks below $780 |
Leading Indicators for our Platinum Price Forecast
Interestingly, platinum is one the few assets that have a very limited number of leading indicators.
One very unreliable leading indicator that only works in times of extremes is extreme supply demand imbalances. This only occurs once in a decade or every 2 decades so we don’t really factor this in.
Interestingly, platinum is one the few assets that have a very limited number of leading indicators.
One very unreliable leading indicator that only works in times of extremes is extreme supply demand imbalances. This only occurs once in a decade or every 2 decades so we don’t really factor this in.
Even Bloomberg did an attempt to define leading indicators for the future price of platinum. They looked at the price chart of platinum, the palladium to platinum ratio, supply cuts, platinum ETF holdings, and the platinum futures market.
We are on record saying that the first 4 are no leading indicator whatsoever, with the exception of extreme supply shortages which, as said only occur every 10 to 20 years.
On the futures market there is indeed some truth in it, but not in the way Bloomberg explained it.
Anyhow, we consider one of the two valid leading indicators for the future price of platinum to be the platinum futures market COT report.
The way to understand this indicator is that it signals a bottom or top when hedge funds have extremely low or high positions. This does not occur often though, certainly not as often as in the gold or silver futures market.
Leading Indicator (partially reliable): Platinum COT
Similar to the gold and silver COT report we look at extreme net positions of non commercials. Every time non commercials are 60,000 contracts net long it tends to signal a major price peak.
However, the opposite is not always true.
The bottoms do not always coincide with extreme low net positions from non commercials.
So this indicator is not very reliable. It partially works to signal major peaks, but not necessarily the bottoms.
The other leading indicator based on our research is the platinum to silver price ratio.
Leading Indicator (reliable): Platinum to Silver Price Ratio
The most reliable leading indicator appears to be the price of silver. In particular the platinum to silver price ratio is a good indicator for when the price of platinum is about to surge.
If we look back 50 years we see that platinum tended to move strongly higher every time silver did so as well. A few times silver went up first, but a few time platinum rallied much more than silver or did so before silver.
So what we can say is that platinum tends to make those big moves up only if silver is in a bull market. This may be an aggressive bull market or a tactical bull market.
Platinum Chart and Price Targets
Let’s now combine the findings of our leading indicators with the observations platinum’s long term chart.
Chart-wise we see 2 major trends based which are reflected in 2 different patterns.
The first pattern is this giant triangle that is in the making for 2 decades. There are 4 tests of secular support ($790) which took place in 2004, 2008, 2016 and early 2019.
The second pattern is the falling channel that started in 2008. This is the pink shaded area.
Important to note is that both patterns now coincide, and the longer term triangle is now providing support to the falling channel. This is the prerequisite for a bullish outcome.
Our #platinum price forecast for 2020 is mildly bullish but for 2021 and 2022 it is wildly bullish. We look at leading indicators and chart in this article to find ultimately 80% upside potential in platinum’s price. Click To Tweet
If and when platinum decides to move out of this triangle, and break out of it to the upside, we will see a monster bull market. It will be the type of ‘big move’ we want to ride.
It is not likely that this will happen in 2020 although we cannot exclude this. That’s because silver is gaining bullish momentum, and as said above it’s the ideal condition for platinum to move aggressively higher.
We believe the odds favor a big move in 2021 or even 2022.
We keep a close eye on the flipside of this bullish story. Bearish momentum will pick up once platinum closes for 3 consecutive months below $790. Not likely to happen, but the flipside always has to be considered by investors!
Posted by :
Jack Dempsey, President
401 Gold Consultants LLC
jdemp2003@gmail.com