Is Platinum Warning Once Again of a Stock Market Crash?

by Rick Ackerman

[Cam Fitzgerald posted the comments below in the Ricks’ Picks forum on Friday, but I am emailing them to all subscribers because his point — that the steep drop in platinum may be warning of a stock market collapse — deserves a wider audience. Cam, whose forum handle is ‘Farmer’, has made some prescient calls in the past. He is also the first person from whom I learned, years ago, that pesticides contained neurotoxins that were killing off the world’s honey bee population. Cam’s ‘platinum indicator’ could have bearish implications for gold as well, since price action in the former often leads the latter. In this case, platinum’s 22.5% plunge since mid-August has more than doubled gold’s 9.5% drop. This is shown in the charts below. For the record, Rick’s Picks‘ outlook for gold recently turned cautious due to the hard selling that has occurred so far in October. I haven’t given up on the idea that the powerful rally in precious metals begun early in 2016 is the nascent stage of a bull market that will run for years. However, technically speaking, the yellow flag is out, and I am no longer recommending bottom-fishing in mining stocks at this time. The sector looks vulnerable to a further correction on top of the 30% decline that has already occurred. RA]

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