Saturday, June 6, 2009

Palladium vs Gold as an Investment (Fail-Proof Plan Part II)

Palladium vs Gold as an Investment (Fail Proof Plan to Wealth Part II)

"Fail Proof Plan to Wealth" Review (click to view full article)

This is being written assuming that you've already read Part I and yesterday's article regarding price changes. For those who haven't read those, the main idea is--since palladium follows gold's movements--to sell gold for palladium after gold moves up, and then do the opposite after gold falls and palladium is still up.

Let's take a quick glance at price gold, silver, palladium, platinum, and rhodium price have changed over the past week:

(June 1 - June 2 - June 6)
* Gold - $988 - 984 - 956
* Silver - $15.90 - 16.20 -15.30
* Platinum - $1220 - 1245 - 1277
* Palladium - $240 - 250 - 260
* Rhodium - $1225 - 1300 - 1350

How to Invest Gold vs Palladium

What To Do

If we had the means to buy and sell gold quickly, we would have sold our gold coins on June 1st when it was $988/ounce. We would have also sold our silver coins at $16/oz. Then, we would turn right around and buy palladium coins and platinum coins with that money.

Fast-forward to June 6, we do the opposite. We sell the palladium bullion coins and platinum bullion coins for $260 and $1278 respectively. We then take than money and re-buy our gold bullion coins and silver bullion coins.

How do we predict this? We follow this simple rule:

Palladium, platinum, and silver follow gold

It's not written in stone, but gold usually starts to move first, followed soon after by silver, then by Pt and Pd. As I said, I'm not guaranteeing this will be the case every time as there are far more factors included that can make things work oppositely, however, this is what happens very often.

Is this easy to do? In theory, yes. If you sold a very small amount of Au/Ag or traded it for Pt and Pd coins you would probably have fees involved in addition to the spot price. But, if you sold a very large amount of gold, say 10 ounces, and bought 40 ounces of palladium with that money, then you might be able to pay the transaction fees as well as make money. Let's look at what might have happened had you sold your gold June 1st to buy palladium, then sold that palladium and rebought gold today, June 6.

(Remember, I'm not telling you should or shouldn't do this, I'm just throwing ideas out to get you thinking about your own gold investment strategy. My current strategy is to hold the metal I own.)

What Would Have Happened

June 1: you sold your 10 gold coins on for $988 each (we're selling at spot for simplicity's sake. No transaction fees). You now have $9880 total. Most people at this point go buy a new TV or take someone out for an expensive meal an unhealthy restaurant. Not us. We would have taken our $9880 and bought 40 oz of palladium for $245/oz. We have 40.3 ounces of palladium now and no gold.

June 6: you take your 40.3 ounces of palladium and sell it all for exact spot price, which today is $260. We now have $10,478. We then take our our money and rebuy the same 10 oz gold bar, and today with gold at $956, we have just over $900 left.

We have $900 leftover! We just made $900 virtual dollars by following a simple pattern. Now what do you do with that $900? You get $50 from Uncle Lester with a promise to cut his grass a few times this summer and buy yourself another gold bullion coin.

You now have $0 and 11 oz of gold and all you've done was sell twice and buy twice for a free ounce of gold! Now most readers here don't have $10,000 worth of gold to begin with, they only have about $1000 worth, or about an ounce of gold. So, if you were to do this with one ounce of gold, you would have made $90. What if you had a 100 oz gold bar ($100,000). Then, you would have made $9000.

Why do I tell you this? So we can work together. I give you ideas and I also get ideas from readers' comments and emails. No, I don't have $100,000 either, but if I do, I know what I'd do with it. Isn't that a great feeling? You now have a reason to get some money saved up so we can work together to build our wealth. Did I mention I take donations?? Just kidding, but I do welcome your creative ideas!


  1. Interesting plan, but the problem is transaction costs! Those will eat up most, if not all, of the gain.

    If/when the Palladium ETF gets off the ground, this could become a viable strategy, but it won't work well for physical metal.

    My strategy is buy and hold for Pd.

  2. I get more information and great ideas which is considered palladium follow gold’s movement to sell gold for palladium, nicely written …
    Watch a free video on Gold IRA.

  3. Thanks for great reading.we buy Gold Bullionin the recession.I pass this to our Ira clients.


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