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Time for a little caution?

Platinum at $2,000 an ounce got the attention of precious metal investors yesterday. It did not close there. It went into the daily logbook as closing at $1,983.70.

The metal has been swept along by news of output shortfalls in South Africa because of an electricity shortage.

Platinum still remains exotic to most coin collectors, who are more comfortable with silver and gold.

I had a conversation with a dealer yesterday who said that “dealers were quoting soft.” What that means is that they are worried that a sudden downdraft might catch them with bullion in their hands and they are factoring in an extra margin as insurance against such a possibility.

The dealer also told me that a couple had commented that they had tried other dealers to sell what they had. The implication being that there is some reluctance to buy out there.

Now I don’t know who the couple called. It might have been the local plumber for all I know, so this story has to be taken with a grain of salt.

Anecdotes, however, can paint a picture for us.

On Tuesday I was asked by an employee here at Krause if now would be a good time to buy some silver. At more than $17 an ounce, I am a little leery about encouraging people to jump in. What the experience tells me is that the upward trend has now gone on long enough that it is getting the attention of people who don’t ordinarily get involved in metals investing.

This anecdote doesn’t mean metals are now at their peak, but in my mind, with my memories of 1980, it might be a caution flag. Back in 1980 we had another nonmetals person here buy silver at the precise top of $50 an ounce. It became part of our coffee break lore.

Don’t be the person who gets talked about for the next few years as having bought at the top. Buy wisely. Don’t be reckless.

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