Gold had better watch its back. Platinum’s price is soaring to new heights and a pair of newly launched exchange traded funds (ETFs) aimed at the metal had a stellar first week of trading.
ETF Securities‘ platinum and palladium ETFs had a resoundingly successful first week, hitting $350 million in assets. The funds also saw trading volume upward of 300,000 shares for palladium and 450,000 for platinum. [Platinum and palladium ETFs are here.]
The London Bullion Market Association forecasts that platinum prices will range between $900 and $2,578 an ounce this year, with an average of $1,550. This may seem radical, considering much of the platinum demand comes form the now-sluggish auto industry. [How demand for other metals besides gold is growing.]
Tony Daltorio for Investment U outlines a few reasons why platinum is primed to have a standout year in 2010:
- Auto demand up in China: China’s fast growth has put this country in the lead as far as the auto industry goes. Car sales in China shot up by nearly 53% to 10.3 million in 2009, while total auto sales – including heavy commercial vehicles – rose 46.2% to 13.8 million units. Experts still expect the sector to post a solid year-on-year gain of 10%–15% this year.
- Platinum Jewelry Market: Even when the West began thinking twice about buying any jewelry in the face of the economic crisis, China stepped in to buy large amounts at the lower prices. Much of the demand for platinum comes from the jewelry market, where fashion trends and economic factors have increased interest in the metal.
- A platinum ETF launches in the United States: ETFS Physical Platinum Shares (NYSEArca: PPLT) is the first physically-backed platinum focused ETF to trade in the United States. According to its creators, PPLT will start out with $500 million or roughly 329,000 ounces at current prices – a significant figure considering that the commodity’s surplus for 2009 was only about 100,000 ounces. [Can these ETFs outdo gold in 2010?]
For more stories about platinum, visit our platinum category.
There are a variety of ways to play platinum and palladium with ETFs and exchange traded notes (ETNs), including the following [Differences between ETFs and ETNs.]:
- ETFS Physical Platinum Shares (NYSEArca: PPLT)
- ETFS Physical Palladium Shares (NYSEArca: PALL)
- E-TRACS UBS Bloomberg Long Platinum ETN (PTM)
- iPath Dow Jones AIG Platinum TR Sub-Index ETN (PGM)
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.