Platinum: The Other White Metal

Distrust of the Federal Reserve and concern that U.S. dollars may become worthless are fuelling a push in more than a dozen states to recognize gold and silver coins as legal tender. Arizona is poised to follow Utah, which authorized bullion for currency in 2011. Similar bills are advancing in Kansas, South Carolina and other states.

Yves here. I’ve heretofore avoided the topic of Bitcoin, since I recall the brief fad of the Second Life currency, which then flamed out impressively. And Bitcoin already has had the US Treasury clear its throat and say if market participants try exchanging Bitcoin for dollars, it takes a dim view of that. Recall that the IRS threatened to tax frequent flier miles, but later dropped that idea. But there is a more obvious choke point with Bitcoin, and the Treasury may come up with others if it were to be used as commercial tender.

Even though the newsletter I write for Casey Research is focused primarily on gold, our metals investments cover all the precious metals, and when warranted, some base-metals plays too. And with the markets in the state they are, I want to say something about silver…

I spent the latter half of last week at the New Orleans Investment Conference, talking with investors, mining companies and analysts about the state of the gold industry. The annual conference falls at an interesting time of the year, as the price of gold typically corrects in October. In fact, going back 30 years, the historical seasonality of gold has been to rise during September, with a subsequent correction in October.

Danny Furman submits:Recently I discussed metals market fundamentals and concluded that platinum (PPLT) has overtaken silver (SLV) as leader of the pack.

ETF Database submits: U.S. equity markets were flat for much of the day Tuesday, as investors were cautious ahead of the Federal Reserve meeting that ended in the afternoon. Once the meeting was over, equities surged briefly but then quickly fell back to opening prices as the Fed hinted at more easing measures in the near future. This news helped to send oil prices lower by close to 2% on the day and pushed gold up by $10/oz. to the $1,290 mark, another new record for the precious metal.

Think Yield submits:With headlines calling for $8,000 gold by 2015 and $50 silver by 2011, the word “bubble” may very well soon be tip of the tongue. Are silver and the precious metals market overvalued, or are we merely witnessing the start of what will be a hyperbolic rise in silver prices in the coming years?