Predicting Silver and Platinum Returns
I already looked at the Gold to CPI ratio to show how it can predict future real returns. It turns out that the same approach can be applied to silver and platinum.
The general model is given by:
Real Returns = A * CPI/Commodity -B
where A/B is the "breakeven" (in real turns) commodity/CPI ratio.
As in the case of gold, the model was improved by factoring in 10Y future GDP. But as a practical tool, I don't see how that would be useful as I have no good way to estimate with any reasonable certainty 10 years of real GDP growth.
But even without factoring in GDP, the model does pretty decent. While the correlation is not as high as gold, there is some correlation. Currently, the model predicts negative returns. This is consistent with negative TIPS yields currently available.
I have my doubts on whether or not this simple model is sufficient to warrant an "overvalued" conclusion for these metals. But it does at least suggest that (real) returns may not be any better than TIPS real returns.