I Sold Platinum

I know silver is all the rage recently given the exciting rally that’s going on right now.

But I want to share my story and thought process on why I sold platinum recently. Hopefully that can help you understand there are different reasons for investing in precious metals other than speculating that prices are going higher—and why I prefer gold over the others.

Here’s how the story goes.

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I was at GoldSilver Central (GSC) after an event with Brian Lam, the managing director of GSC. I had invited him, together with Aggregate Asset Management and Astral Asset Management, to speak to the Dr Wealth audience at the Lifelong Learning Institute in Paya Lebar. Brian was there to shed light on precious metals.

The year was 2016.

Gold was about US$1,200/oz.

Silver was around US$18/oz.

But I already had physical gold, so I was at the shop to buy platinum. It was about US$1,000/oz.

Yes, physical platinum. I had every intention of holding it for the very long term.

I didn’t care where prices went and just left it in the safe.

Indeed, platinum prices didn’t go anywhere—until this year.

I only took notice recently because precious metal prices were rallying. The crazy, rocket-like vertical rally I saw on the platinum chart prompted me to take profit. Why? Because such a price move is a typical parabolic blow-off top that could collapse. I wanted to sell into strength. Also, it had crossed the psychological US$2,000/oz price level.

So I went back to GSC to sell the physical platinum.

Many investors wonder if buying is easy but selling physical is hard. I guess it depends on the shop. GSC didn’t ask any questions—just quoted me the latest price. I didn’t haggle. I opted for PayNow and the money was credited within an hour. This is not a sponsored post or endorsement. Just sharing my real-life experience.

I wouldn’t say I made much. I transacted in SGD, and the USD has depreciated against SGD since 2016—from 1.4x to 1.2x today. In USD terms, my profit would be about 100%, but in SGD terms it shrunk to 76%. The average annual return is a mere 6.5%. Nothing to shout about.

So why not hold longer and wait for a better price, you might ask?

Prices may indeed rise further. But the problem with such parabolic price moves is that no one knows how high they’ll go—or when they’ll collapse. It was a good enough price for me to exit.

The bigger reason I wanted to sell? I don’t wish to hold platinum anymore. I only want to hold physical gold as my key precious metal diversifier.

Why? Because gold has been prized by humans for thousands of years as a store of value. Even central banks own gold. Monetary systems were based on gold—not silver, platinum, or palladium. Gold is the benchmark accepted in our society.

Many will argue that these other metals have industrial uses and that demand may push their prices higher. Again, I’m not interested in speculating on price moves for precious metals. I just want to hold a doomsday asset should every other financial asset fail. For example, during a war where fiat currencies depreciate greatly, stocks, bonds, and properties would probably be worthless. I want to be assured that I still own an asset that could keep part of my wealth intact. And I trust gold more than the other metals to do this job well.

Moreover, with silver, you need a lot of weight to get the equivalent value of gold. The current ratio is about 58. That means I’d need 58kg of silver to be worth the same as 1kg of gold. That’s heavy and takes up a lot of space. It isn’t practical at all.

So it’s gold for me—and I ain’t selling. Not even when I’m sitting on over 200% gains. I didn’t buy it to speculate or make a profit. If prices crash, I’m fine with it too. As I said, it’s for doomsday hedging. So it’s still a hold for me.

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When I was at the shop, there was a queue to buy. Everyone else was buying—except me, who was selling.

This is another classic example of people getting interested in investing only after prices have gone up.

This is the herd instinct we see again and again:

• Property showrooms are packed when prices are going up
• Stock discussions are rife on social media when prices are rallying
• Crypto hodlers aplenty when prices are going to the moon
• Food stalls with queues will see even longer queues

Things change, but we don’t change. Not even the younger generations.

I’m not suggesting that precious metal prices will fall, but we all know the risks are there. It becomes a lot more difficult if you’re trying to speculate for quick profits, because we don’t know where prices will be in the future.

While most investors are projecting higher prices—otherwise why would they buy?—they may not be prepared for the scenario where prices fall. If so, they don’t know what to do and will most likely do nothing and hold on to the metal. And if it’s a downcycle for metal prices, it may mean waiting 10 years or more before seeing prices recover. Remember the earlier chart, where platinum prices were sideways for nine years.

I’m not discouraging investments in precious metals now. But I hope investors know why they are buying.

Better not be for speculating short-term profits. If so, don’t buy physical—the spread isn’t worth it and it takes time to sell. Use ETFs instead. They’re faster and have lower trading costs. And more importantly, you must have the proper trading strategy or technique to manage the risk. If not, better not to speculate.

And if you’re buying for the long term, why buy when prices have risen? Why didn’t you buy when prices were much lower? Is FOMO speaking? If so, you need to cool yourself down and think rationally. Are there other better investments you could put your money into? Maybe waiting for the next downcycle to accumulate physical metals would be a better approach.

I’m sharing this story because I think interest in precious metals is elevated right now, and I feel it’s unhealthy when investors are just FOMOing instead of really knowing why they’re buying metals.

If you’re going to invest in precious metals, do it for the right reasons. Understand what you’re holding and why you’re holding it. And most importantly, have a plan—whether that’s for the long term or for short-term trading.

Don’t just follow the crowd into the shop because everyone else is buying.

P.S. If you’re looking for more investment ideas, Alvin shares how he finds the best stocks to invest in to grow our Dr Wealth portfolio. Learn more here.