While U.S. investors eagerly await platinum- and palladium-focused exchange traded funds (ETFs), they don’t have to sit idly by. There are ways to play this market while you wait.
London-based securities group ETF Securities filed for the first bullion-backed platinum and palladium ETFs to the United States. The last time the idea of such ETFs was floated back in 2007, there was plenty of resistance. This time, the move has been met with silence.
Hard Assets Investor on iStockAnalyst says that The Big Three can be thanked for the quiet this time around: The auto industry’s collapse has changed everything, making it possible for ETF Securities to bring its platinum and palladium funds – already very successful in Europe – to the States.
The biggest question now is whether there will be shortages of this bullion, as the economic pullback has investors crazy for physical investments. Keep in mind that platinum and palladium are primarily industrial metals, used in everything from computer hard drives to fertilizers to fiber optic cabling. Platinum also plays a key role in the catalytic converter, where the harmful emissions from cars are cleaned up.
Investors eager to see the launch of these funds will for now have to content themselves with exchange traded notes (ETNs) until the first ETF is introduced instead. Bear in mind that there’s also no guarantee that the Securities and Exchange Commission (SEC) will give the go-ahead to these funds.
The ETNs don’t hold any physical bullion.
- E-TRACS UBS Bloomberg Long Platinum ETN (PTM): up 21.6% year-to-date
- iPath Dow Jones AIG Platinum TR Sub-Index ETN (PGM): up 22.9% year-to-date
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.