Platinum/gold spread widening

Palladium tore through its 12-month high last Friday like a hot knife through butter, while platinum widened its premium over gold. Gold continues to be pulled back towards $1,650, however, while silver is facing those oh-so familiar problems at besting $32, which has been acting like a magnet on silver for the best part of 18 months now.

Hedge fund money flows are what Dan Norcini highlights as the simple ingredient that gold and silver need in order to push higher. Until there’s an element of speculative buzz about these metals, we’ll continue to mark time. If you think times are tough for yellow metal holders though, spare a thought for mining equity owners: with the Philadelphia Gold & Silver Index (HUI) close to a monthly close (400) last seen in early 2006 – back when gold was trading under $600/oz.

We will see new price highs as the bullish indicators keep slowly piling up – like kindling in preparation for a fire. Friday brought news that China’s securities regulator has announced plans for the introduction of gold exchange-traded funds into the country. Yahoo.com describes this as “part of government efforts to boost the development of both the gold market and the capital market.” Gabriel Mueller discussed some of the dynamics behind this Chinese demand in more detail as part of his last article: “Central banks: flush with paper money; low on real money”.