Platinum Bullion ‘May Be One Of The Only Cheap Assets Out There’

Platinum “may be one of the cheap assets out there” and “is cheap when compared with stocks or bonds” according to Dominic Frisby writing in the UK’s best selling financial publication Money Week.

Platinum Bullion in USD (15 years)

Frisby writing in Money Week laments the total absence of value in today’s markets. He then identifies an asset that is both cheap (on a relative basis) and is valuable and the article is well worth a read:

The value investor’s lament – where have all the cheap assets gone?

Every week in MoneyWeek magazine there’s a small column devoted to great investors from the past. You read a bit about who they were, what their circumstances were and what their methodologies were.

Sometimes I’ve heard of them, sometimes I haven’t – but as often as not it seems that they were a value investor of some kind. Value investing is, I suppose, the most basic and instinctive of investing systems. You buy when you deem something to be cheap and you sell when it gets expensive. The principle has been applied for as long as humans have invested money.

And yet it no longer seems to work. In this modern age of suppressed rates, quantitative easing, and easy (if you mix in the right circles) money, nothing is cheap – except money itself.

Value investors have, mostly, been beaten by index trackers, and those who have simply gone long (ideally with as much leverage as possible), have wiped the floor with the prudent. Sensible, disciplined approaches have not worked. The stock market has flown and taken everything with it.

As I went for my daily walk yesterday, I asked myself: “What out there is actually cheap at the moment?”

Trader wearing a Finding value has become increasingly difficult

It depends on your valuation matrix, of course, but it’s hard to make the case that stocks are cheap. The Dow, the S&P 500, the Nasdaq – they are all at all-time highs, pretty much. I’m not saying they can’t go higher. But all-time highs is not cheap.

The various FTSE indices are also in record territory, same too France and Germany. Japan is at 20-year-plus highs. On a country-by-country basis you might be able to argue somewhere is cheap – Greece (for a reason) – but it’s hard to say there is real value out there in stocks as an asset.

The same goes for bonds. The yields on government bonds are, except for exceptional cases, minimal. As low as, 2016 excepted, they’ve ever been. Again, yields could fall – bonds could get even more expensive – but you can’t make the case that government bonds are cheap. The same goes for corporate and junk bonds.

In the UK, the real estate market has two sides to it. In places like London, Brighton, Bristol, Oxford or Cambridge, prices bear little relation to local earnings.

Then there are other regions where the 2007 highs were never recovered. You could find value in, say, parts of the Midlands or North Devon. But that’s not the same as being irresistibly cheap. Moreover, the future for UK real estate investing does not look good to me – it seems the government does not want to encourage it beyond owning your own home.

You start looking at other assets: bitcoin and digital assets. Nope. Not cheap. Art. Nope. Not cheap either.

The only asset class that’s cheap right now

About the only assets I can find that are cheap are in the commodities sector. Oil looks reasonable value. I’m writing this piece from Texas, and I can tell you that oil consumption shows no signs of abating.

But the real zinger for me is platinum.

It’s as though the kid at school, who used to get straight As in all his grades and be captain of all the sports teams, has suddenly for no apparent reason, been relegated to the back of the class. He’s politely putting his hand up and saying, “Hey, remember me?” but nobody cares. They’re all ignoring him.

John wrote about this the other week, but it really is striking.

Back in the day, platinum was the star. It was