One commodity in particular seems to be paying the price for the growing popularity of exchange traded funds (ETFs): platinum.
There are platinum ETFs listed in both London and Zurich. The two funds together hold about 85% of last year’s global market deficit of 480,000 ounces, reports Atul Prakash for Mineweb. One analyst at Lehman Brothers says the funds are creating demand that otherwise would not have existed, contributing to the high prices.
Platinum is also squeezed by persistent mining output problems in South Africa, as well as the higher prices luring more and more investors.
The platinum ETFs are listed on exchanges and offer investors exposure to the underlying commodity without actual physical delivery. The sponsors buy the matching amount of the commodity and keep it in bank vaults.
In the United States, exposure to platinum can be had through exchange traded notes (ETNs):
- Elements MLCX Precious Metals Index (PMY)
- E-TRACS UBS Long Platinum (PTM)
- E-TRACS UBS Short Platinum (PTD)
PMY tracks a benchmark of precious metals that includes platinum. PTM and PTD are tied to futures contract instead of holding the physical commodity, so the liquidity of the metal is not an issue when it comes to these funds.
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.