It’s been a long wait, but finally U.S. investors have the physically-backed platinum and palladium exchange traded funds (ETFs) they’ve long been clamoring for.
ETF Securities, which has offered a physically-backed platinum fund in Europe, has launched two similar funds here:
Already, Reuters has noted that trading volume has been robust on their first day.
Each trust will custody all of the physical metal in plate and ingot form in a secure London Platinum Palladium Market-approved vault. The metal in the vault will undergo a bi-annual audit from an independent specialist, and ETF Securities’ website will contain all the identification numbers and audit information.
Platinum and palladium have a range of precious metal attributes, but they’ve also got a range of industrial applications. Most notably, they’re used in the automobile industry in catalytic converters, which remove emissions. As the green energy sector gains momentum and auto sales recover, platinum and palladium are in a strong position to benefit.
Until these funds launched, U.S. investors could access platinum through exchange traded notes (ETNs), and there was no palladium ETN. ETNs act like they own the physical commodity, although they don’t. [Platinum plays for price runs.]
The two new funds will buy and sell “baskets” of metal to handle liquidations and purchases. The prospectus for the funds state that the trusts will be discontinued and liquidated if the fund doesn’t have $350 million on its books in the first year. The ETFS Palladium Trust will sell $250 million in shares and the ETFS Platinum Trust will start out with $500 million.
For more information on platinum, visit our platinum category.
- E-TRACS UBS Bloomberg Long Platinum ETN (NYSEArca: PTM): up 3.1% in the last month
- iPath Dow Jones AIG Platinum TR Sub-Index ETN (NYSEArca: PGM): up 4.3% in the last month
Max Chen 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.