The premium of gold over platinum has moved to its largest on record, at around $240/oz, as platinum becomes increasingly detached from gold and some investors look to take advantage, sources said Tuesday.
Platinum was trading around $835/oz on spot markets in morning trading, dragged down by base metals, while gold hovers around $1,075/oz.
Both have performed badly this year, hitting multi-year lows, but at $240/oz, the premium of gold over platinum has never been as large.
Platinum, a precious metal used primarily in the automotive and jewellery industries, has been cheaper than gold since January, but has historically traded at a premium to gold.
Platinum was at a discount to gold in 2011 and 2012, at the height of the gold bull run, but never exceeded $200/oz.
Some have said the extent of the discount could push investors into platinum, at gold's expense.
One senior trader in Hong Kong told Platts that he would now go short on gold and long on platinum.
"The discount is so wide -- it's crazy," he said. "It could take the appeal off of platinum being a luxury metal for jewelry manufacturers in Asia."
He added that once the Volkswagen scandal has settled, platinum will rise again as more is needed to load more efficient auto-catalysts.
A trader said via email that "there might be some latent investor length that still has to be cut, but given the supply side dynamics, makes sense to be long platinum/short gold."
Commerzbank said in a note Tuesday that the discount "should see platinum attracting greater demand from the jewellery industry."
