Over the last 40 years, the ratio of the price of an ounce of gold to an ounce of platinum has risen from its typical range of 0.5 – 0.95 to exceed 1.0 a total of 11 times. Two of those times it spiked to over 1.2, and once to 1.4. The other 8 times, it receded within a few months.

Last week the ratio hit 1.0 for the first time since late 2008, then backed off a tad, and in today’s risk-off trade platinum is down and gold is up so that the ratio is again 1.0.  It makes sense for gold to be stronger than platinum when the markets are puking risk, since gold is more monetary and platinum is more industrial, but history says that the ratio will recede sooner or later.

Sentiment also suggests that gold is due for a pullback of some kind, since traders have been overwhelmingly bullish on the metal for the last month. Traders are of a more neutral opinion when it comes to platinum, so from a sentiment point of view you can make the case that gold needs to cool off in relation to platinum.

Here is a three-year chart of the daily closing ratio:

Source: stockcharts.com

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Here’s a long-term chart that is not up-to-date:

Source: Market Oracle