Even with the end to labor unrest in South Africa, however temporary it may be, exchange traded funds backed by physical holdings of palladium and platinum have the potential to continue rising.
Prices of platinum group metals, including palladium, have surged in recent weeks even amid news labor strikes in South Africa were close to an end. The ETFS Physical Palladium Shares (NYSEArca: PALL) is up 3% in the past month while the ETFS Physical Platinum Shares (NYSEArca: PPLT) is higher by 5.1% over the same as platinum futures currently reside near 10-month highs. [Bullish Fundamentals for Palladium, Platinum ETFs]
“We believe investors are finally focusing on the fundamentals of platinum and palladium and believe that prices will continue to rise as the industry struggles to get back to full production. More structural changes are foreseen in the near future, with PGM prices likely to benefit from increased tightness,” said ETF Securities in a new research note.
South Africa is the world’s largest platinum produce and the second-largest palladium producer behind Russia, highlighting the role labor strife there and economic sanctions against Russia played in boosting palladium prices this year.
Although the South Africa strike appears to be resolved, it cannot be forgotten Africa’s second-largest economy has a history of labor unrest that adversely affects its mining output. Additionally, though the strikes are over, it is unlikely that new supply will come to market fast enough to erase another year of expected palladium deficits. [Platinum ETFs Survive Lost Strike Premium]