We’ve seen that Palladium is close to achieving parity with Gold and may surpass Gold’s price soon.

Here’s a possible play: Sibanye-Stillwater (SBGL), a miner which is a top 10 Gold producer and the #3 palladium producer globally. Wiki link.

Benchmarking this stock against my favorite index, the Nasdaq 100, reveals a bullish cup and handle reversal pattern under development. In October 2018, the SBGL:$NDX ratio broke out of a 2+ year downtrend that began in August 2016. The breakout and subsequent backtest are forming the handle of a possible cup and handle reversal pattern. A similar cup and handle pattern in the ratio was observed in the second half of 2015, before a breakout which sent the price of the stock from 6 per share to 18 per share in 2016.

Possible upside: Say the ratio broke upwards above the current cup and handle. If the ratio revisits the 2016 peak ratio of 0.0040 and Nasdaq 100 remained static at 6600, this implies a target price of 26.40, which is 780% greater than SBGL’s current price around 3.00

I like the technical setup here. Adding to my watchlist for a possible long trade. Beware any geopolitical risks associated with investing in a miner based in South Africa. -Harry