If you’re a gold investor, you probably have a bad taste in your mouth, and I don’t blame you. Gold stocks have gone nowhere for what seems like years. Gold itself hasn’t moved much in the past year.
So you’re probably sitting on the sidelines, waiting for something (anything
) to happen to buy more, or maybe even to cut your losses.
But there’s always something you can do.
I’m not advocating trading. I think it’s a great way to lose money quickly if you don’t know what you’re doing. But there’s one trade that I actually like in the precious metals world. It’s not a super quick-moving trade that you need to watch every day, or even every week. But it can give you 10%-30% gains pretty easily when it gets set up. Right now, we’re in the middle of that set-up.
I’m talking about the gold-platinum trade.
The last time I pulled the trigger on this trade for myself I made 12% in a few months, which is not terrible while we wait around for gold stocks to catch fire.
The premise is simple: Platinum is almost always more expensive than gold (for a variety of reasons). But right now, it’s cheaper than gold.
The trade? Buy platinum (I prefer the ETFS Platinum ETF
(NYSEARCA:PPLT)) and hold it until the trend reverses back to normal.
Since we know gold and platinum are both in long-term bull markets, there’s little risk of both metals falling very much during the course of this multi-month trade.
I like this trade because it’s simple, it has almost no chance of losing much (if any) of your money, you don’t need to watch it like a hawk, and
it distracts you from how terribly boring the gold markets have been.
I currently own PPLT and plan to hold it at least until gold is less expensive than platinum for a full trading week.
This article by Kevin McElroy originally appeared on Wyatt Investment Research.
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