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Gold vs. Silver vs. Platinum: What Leads, What Follows?

New insights from our Metals Pro Service editor

by Tom Denham
Updated: May 25, 2018

In light of this week's rally in gold prices, it's worth talking about precious metals. ElliottWaveTV asked our Metals Pro Service editor, Tom Denham, to explain how he picks the best opportunities for subscribers.

Dana: Hi, I am Dana Weeks, and joining me today is Tom Denham, Elliott Wave International's Senior Metals Analyst, and editor of Metals Pro Service. Hi, Tom.

Tom: Hi, Dana.

Dana: Do gold, silver, and platinum trend together or do they generally go in different directions?

Tom: Well, that's a great question. At large degree, they are often moving in the same direction although there are some dramatic divergences. For instance, where platinum topped in 2008 and gold and silver didn't top until 2011, but at the intraday level, you will sometimes see some real differences between them, and they don't top and bottom on the same days, and they sometimes don't move as strongly when they are moving in the same direction. So we get different patterns overall, but largely, I am most happy with my markets when they are actually moving in the same direction, and when those occasions come up when they are moving in different directions, I am tense because I know something is probably going to change, and I have to be ready to accommodate that change with my forecast.

Dana: And which one do you think is leading? Or are any of them leading beyond the short term?

Tom: Well, I use silver as a leading indicator on a pretty regular basis. It tends to lead to the upside in comparison to gold, and it tends to lead on the downside, also. Gold stocks function in a similar capacity. Moving up in gold stocks is often a signal that both gold stocks and gold are going to move up, and the same for the downside. This leadership is not perfect by any means. There are times when it just doesn't work, but when I look at long periods of time, and give it a chance, I see that there is a leading relationship that's strong enough that I pay attention to it on a regular basis.

Dana: And Tom, how do you decide which one has the best opportunity for subscribers?

Tom: There are a lot of people who just only wanna trade gold. And if I tell them that platinum is doing something fabulous it's like, "Well, I don't trade platinum. I only wanna do gold." And there are some folks who are very aware of the role that silver plays as a leading market, and so they're eager to be either long or short silver. And then there's plenty of folks who say, "Yeah, I know that leading relationship's there, but it moves so fast that you can get hurt in silver in ways that you don't get hurt in gold." So I try to just lay out the patterns and the forecast, and the developments that I see coming, and let everyone make their own decision. Though I have to say, I spend a little more time on gold than anything else because I know that's what the great number of my subscribers are training.

Dana: Digging into the markets a little deeper, how big a bottom are you looking for in gold?

Tom: I think we finished a flat corrective pattern...

Editor's note:In the full version of this interview, Tom gives you his long-term forecast for gold and explains which of three precious metals has the biggest potential. The full version is reserved for EWI subscribers. Learn more about our Metals Pro Service here.

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Precious Metals: gold, silver, platinum, palladium, metals stocks and ETFs.
Base Metals: LME Copper, Comex Copper, Aluminum, LME Lead, LME Nickel, LME Tin, LME Zinc.

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