Platinum and Palladium ETFs are Long-Term Bets

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While short-term growth in platinum and palladium markets have been mired by lackluster auto sales, their related exchange traded funds (ETFs) could be better off over the long-run.

As a result of the weak May car sales data from U.S. car makers, platinum and palladium prices fell. Additionally, the disasters that fell upon Japan also disrupted the supply chain among auto makers, and economic worries kept consumers from making new purchases.

Both platinum and palladium are used in catalytic converters, which account for 46% platinum and 61% palladium demand, according to The Wall Street Journal. As such, the two metals are closely linked to economic cycles in the automobile industry.

According to Barclays Capital, year-to-date short-term interest in platinum has dropped 14% while short-term interest in palladium fell 43%, writes Heather Struck for Forbes.

Suki Cooper, precious metals analyst with Barclays Capital, opines that platinum will remain flat in the Euro market, but auto production in the U.S. will improve and the “demand profile will improve over the year.”

Barclays projects platinum spot prices will expand 1% this year to $1,825 per ounce and estimates palladium spot prices will jump 5% to $823 an ounce.

• ETFS Physical Platinum Shares (NYSEArca: PPLT) is up 2% year-to-date.
• ETFS Physical Palladium Shares (NYSEArca: PALL) is down 2.1% year-to-date.

For more information on the precious metals, visit our platinum or palladium categories.

Max Chen contributed to this article.