Let’s cut to the chase. From 1979 through 1995, platinum showed a gain during the January-February period 10 times, or 58% of the time. Not bad, but not great. However, since then platinum has showed a Jan-Feb gain 23 out of the last 24 years, or 96% of the time.
Figure 1 displays the average monthly gain for platinum futures since 1978. The importance of Jan-Feb is pretty obvious.
Figure 1 – Average monthly % +(-) for platinum; 1978-2019
Since most investors will never consider trading platinum futures (and let’s be honest, that’s probably a good thing), let’s consider the Jan-Feb performance of an ETF that tracks the price of platinum.
Figure 2 displays the cumulative % +(-) achieved by holding ticker PPLT only during the months of January and February since 2011 (it started trading mid-January 2010 so 2011 is the first full Jan-Feb period on record).
Figure 2 – Cumulative % +(-) for PPLT during Jan-Feb ONLY; 2011-Jan 6, 2020
Figure 3 displays PPLT results on a yearly basis.
Figure 3 – PPLT Jan-Feb performance
Summary
So, will platinum extend it’s amazing streak of the past 24 years and register a gain during January-February of 2020? Ah, there’s the rub. No matter how consistent any past seasonal trend has been, there is never any guarantee “this time around.”
But if you were looking for a trading opportunity – and you were considering a bet on platinum, which side would you choose? Long or short?
Here’s a crazy alternative: While I don’t actually advocate this as an investment strategy, it is food for thought. In this article I wrote about ETF ticker MINT as a “safe haven”. So, consider this strategy:
*Long PPLT January and February
*Long MINT the rest of the year
Crazy, right? But just for the record, Figure 4 displays the equity curve starting in February 2010 through November 2019.
Figure 4 – PPLT/MINT Cumulative % +(-)
Also, for the record:
*Average 12-month % +(-) = +9.1%
*Maximum drawdown % = -4.5%
Probably not a viable standalone strategy, but again – food for thought.
Jay Kaeppel
Disclaimer: The information, opinions and ideas expressed herein are for informational and educational purposes only and are based on research conducted and presented solely by the author. The information presented does not represent the views of the author only and does not constitute a complete description of any investment service. In addition, nothing presented herein should be construed as investment advice, as an advertisement or offering of investment advisory services, or as an offer to sell or a solicitation to buy any security. The data presented herein were obtained from various third-party sources. While the data is believed to be reliable, no representation is made as to, and no responsibility, warranty or liability is accepted for the accuracy or completeness of such information. International investments are subject to additional risks such as currency fluctuations, political instability and the potential for illiquid markets. Past performance is no guarantee of future results. There is risk of loss in all trading. Back tested performance does not represent actual performance and should not be interpreted as an indication of such performance. Also, back tested performance results have certain inherent limitations and differs from actual performance because it is achieved with the benefit of hindsight.
