Why Platinum ETFs are Up 20% This Year

March 2nd at 6:00am by Tom Lydon

Platinum prices and exchange traded funds are heating up with year-to-date gains of 20% as the health of the global economy is looking better. A short supply could also support a rise in platinum prices if demand spikes while South African miners are on strike.

“Global demand for platinum is growing around 4% annually and the metal is an important part of the industrial process. The stakes are high in South Africa, with Impala saying deliveries will be reduced by half so that sets up a strong case for platinum as an investment story short-term,” Tim Harvey, senior vice president at ETF Securities, said. [Why Platinum ETFs are Outperforming Gold This Year]

South African platinum miners are on strike, and the country supplies 75% of the world’s platinum. The government in South Africa has been trying to regulate and set controls, and some plants have been temporarily shut down, reports Kenneth Rapoza for Forbes. [Platinum, Palladium ETFs Look to Bounce Back]

According to one analyst, the quantitative easing occurring in the U.S., Japan and Europe could have platinum hitting $1,800 an ounce, possibly $1,900. The April platinum futures contract closed at $1,707 earlier this week.

Furthermore, platinum deliveries for April have been reduced by about 50% of the normal amount. [ETF Chart of the Day: Platinum]

Platinum prices have been on the rise since the 2008 market meltdown due to increased demand in China, Russia and Brazil’s auto markets. Platinum is similar to silver in that it is used as an industrial metal so prices are sensitive economic sentiment. [Why Platinum ETFs are Outperforming]

Platinum ETFs/ETNs include:

  • ETFS Physical Platinum Shares (NYSEArca: PPLT)
  • iPath Platinum ETN (NYSEArca: PGM)
  • E-TRACS Platinum ETN (NYSEArca: PTM)

ETFS Physical Platinum Shares


Tisha Guerrero contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

Tickers

PPLT