Change of thinking about investment Vol.1 (Gold & Platinum regular investment)

It’s been almost two years since I first invested in stocks. The balance of the first year is a big minus, and the second year is also a minus. However, I made a strong determination to make the balance in the second year absolutely positive. I decided to create my blog as an expression of that determination and record the process. I hope this blog will help people in the first year of stocks to take a detour like I do and not have a big negative balance from the first year. 

 

As a result, the balance of the second year could not be positive and the third year started. It’s embarrassing to write my thinking at the time when I started investing in stocks. I start a series to prevent everyone to fall into the same hole. Before I started investing in stocks, I conducted on precious metal regular investment at first. 

What is precious metal regular investment? 

Around 2019, I started thinking that I should start investing, and I searched variously on the Internet. I forgot what triggered it, but at first I was interested in precious metal regular investment. The TV commercial song “Gold regular investment steadly steadly ♪” was so popular as I remember. According to various investigations, the major precious metal investment were gold, silver, and platinum. 

 

I found interesting that the usage differs depending on the type of precious metal, as shown in the figure below.

I understood that over half of gold would be used for jewelry, but I was surprised to learn that more than half of silver and platinum were used for industrial purposes. Gold is now more expensive than platinum. But in my imagination, platinum is more expensive than gold. Therefore, I think that many people used to choose platinum for their wedding rings. By the way, my parents also had platinum wedding rings. About credit cards, the platinum card has upper grade above the gold card. 

 

Platinum began to exceed the price of gold in 1995, and there was a time when the price difference more than doubled. Since 2015, the price of gold has definitely tended to exceed platinum. 

Around 2007, platinum became so high because platinum demand increased for exhaust gas cleaning device of car diesel engine. After that, the popularity of diesel cars declined. As a result, demand for platinum has fallen.   

At this time, the demand for gasoline-powered vehicles began to rise, and the price of palladium used in the exhaust gas purification equipment of gasoline-powered vehicles is rising unlike platinum.  

I think the reason why the price of platinum has a lot to do with economic trends and the rise and fall of the technical field is that, unlike gold, demand for industrial use accounts for more than half.  

The transition of platinum prices over the five years from 2015 is stagnation, quite different from the soaring prices of gold and silver. 

It is interesting to read the booklet “Basic Knowledge of Precious Metal Trading” (published on the website of Tokyo Commodity Exchange) in detail about investment in gold, silver and platinum. 
 
↓ Please read it. But I’m sorry it is Japanese language… 

https://www.tocom.or.jp/jp/guide/study/textbook/2020_PreciousMetal_textbook_1.0.pdf

I started to buy gold & platinum regular investment

In February 2019, I started to buy gold and platinum. I had senn many times the information that “gold is strong against inflation and defensive, so it is a good investor to add to the portfolio to some extent!” 

Platinum was on a downtrend, gold was on little uptrend, but it didn’t look very good on total balance. When I think about it now, I couldn’t say anything about the regular investment of gold and platinum in a short period of time. But at that time, I was delighted to see the market price every day.  

However, I suddenly noticed it after about a month and a half. 

・ It is free when sold, but a 2% commission is charged at the time of purchase.  

・ The price spread at the time of buying and selling is large. Gold is about 1.3%, platinum is about 3.9% (as of January 2021) 

How about a 2% commission at the time of purchase? You might think it’s only 2%. However, depending on the securities company, the commission for domestic stocks is about 0.05% or less. That’s too high considering that US stocks are 0.45%. 

It may be normal in Forex etc., but the price spread at the time of buying and selling is large (the price spread is the price difference between selling and buying. This is the commission income of the securities company. It is high when buying and cheap when selling)  

Even if you buy it and sell it immediately, you will lose the commission as shown below.   

・ Gold          purchase fee 2% + spread 1.3% = 3.3%  

・ Platinum   purchase fee 2% + spread 3.9% = 5.9% 

Whether it’s short-term investment or long-term investment, I think it’s difficult to regain such fees. 

I’m glad I managed to sell everything around August 2020, around plus or minus zero. 

I tried to simulate whether I would lose money if I really paid this fee. 
Assuming that from January 2015 to November 2020, a monthly net deposit of 10,000 yen was accumulated at the monthly average value.

I tried to simulate whether I would lose money if I really paid this fee. 

Assuming that from January 2015 to November 2020, a monthly net deposit of 10,000 yen was accumulated at the monthly average value. 

The profit and loss, which was almost plus or minus zero from 2015 to mid 2019. But it soared to +270,000 yen in late 2020. And it finally reached +200,000 yen in the end. We invested about 730,000 yen to increase 200,000 yen. Real investment period is five years, but the result was + 28% in actual only 18 months…… 

 That’s strange….. Actually, because of expensive commissions, I wanted to make a story that the total balance would be disadvantageous if you purchase precious metals regular investment….. 

 
In simulation, I got on the big wave of gold prices from the second half of 2019. But actually, I already sold everything in August 2019. It was my failure story that I could not get on the big and long gold prices rise….. 

Other ways to buy gold? 

It was a big profit in the gold regular investment simulation from 2015 to 2020. But I don’t think I will buy the same gold or platinum regular investment even if I return to this era. I won’t take the risk of paying a high commission. 

If I were to buy gold now, I would choose ETF instead of regular investment. There are many types of gold ETF. Considering the amount of net assets and liquidity, If it is in Japanese stock market, 

Pure Gold Exchange Traded Fund (In-kind Domestic Storage Type) (1540) Trust Fee 0.44% 

I think this will be a candidate for selection. Now, it is wonderful that “SBI SECURITIES” and “Rakuten Securities” also have no transaction fees. 

In U.S.A stock market, 

SPDR Gold Mini Shares (GLDM) Trust Fee 0.18% 

I think this will be a candidate for selection. Compared to “Pure Gold Exchange Traded Fund(1540)” in Japan, the trust fee is cheaper, but It takes time and effort. Because it takes time to purchase after exchanging yen to dollars. 

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