The launch of ETF Securities’ platinum exchange traded fund (ETF) earlier this year has proved to be an irresistible lure for investors looking for precious metals exposure. Will it leave gold in the dust? Some say so. Here’s why.
- The demand base for platinum is higher than it is for gold. The balance comes from industries such as chemicals, electrical, glass, petroleum as well as from jewelery, with a big pull coming from the auto industry, explains Devendra Nevgi for DNA India.
- Platinum’s supply-demand balance remains tight as the extraction and mining process is extremely complex and labor-intensive. Much of the supply of platinum comes from South Africa, Russia and Canada, as well as the recovery of scrapped cars. [Ways to Play Gold with ETFs.]
- Newer stringent regulations requiring manufacturers to cut carbon emissions are more beneficial to platinum then for gold.
- As a strategy, it would make sense to partially switch to platinum from gold as the global economy recovers from a low point, industrial activity further gathers steam and risk appetite increases. [How Metals ETFs Have Transformed Investing.]
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- SPDR Gold Shares (NYSEArca: GLD)
- ETFS Gold Trust (NYSEArca: SGOL)
- ETFS Physical Platinum (NYSEArca: PPLT)
- First Trust ISE Global Platinum (NASDAQ: PLTM)