Time to Take Profits on this Popular Platinum Trade?

If you’ve been following along, I hope you were able to buy platinum when I wrote about it over the past year.

I’ve made this trade a few times now over the past couple years.

The premise is simple – which is always the hallmark of a solid trade. I buy the ETFS Physical Platinum ETF (NYSE: PPLT) whenever the spot price of platinum falls significantly below the spot price of gold.

Platinum is rarer than gold and typically sells for 10-15% more – so it’s a matter of waiting for platinum to resume its normal relationship with gold.

The last time I made this trade was in 2011, and I scalped about 11% over four months.

I then bought PPLT again in April of 2012 – when I wrote:

“I put in a lowball bid at $150 on the ETFS Physical Platinum Shares Fund (NYSE: PPLT).

“I anticipate that I will get filled sometime in the next week or so.

“And I anticipate I’ll make another 10% or more in the next few months at the very least as the situation reverts to the mean.”

I then wrote to you again in early December of 2012, telling you there was still time to get in on this trade:

“Buy platinum (I prefer the ETFS Platinum ETF (NYSE: PPLT) and hold it until the trend reverses back to normal.”

Well, now platinum is back on top.

I plan on selling PPLT if it stays on top for more than one trading week.

That means that if it’s still more expensive than gold by this time next week, I’ll pull the trigger and sell.

And I hope you were able to make this trade alongside me. I rarely make trades like this one, but it’s one of the exceptions to the rule.

And if you missed out, don’t fret. Other opportunities will come along – and I’ll keep you alerted.

Further Reading:

If you’re interested in getting back into precious metals investing, my colleague Tyler Laundon believes this is one of the best times of the last decade to buy gold stocks. He has two specific stocks in mind to take full advantage of the resumption of the gold bull market.

Tyler expects an upside breakout in gold stocks to resume any week now… Right now, the two companies he expects to lead the charge are cheap and offer outstanding upside… with only modest risk. Get the full story here to learn more about these gold stocks from “The Heart of Darkness.”