In the precious metals space, exchange traded products such as the SPDR Gold Shares (NYSEArca: GLD), the iShares Silver Trust (NYSEArca: SLV) and other gold and silver exchange traded products command most of the attention, but palladium and platinum are delivering for investors this year as well.
The GLD and SLV equivalent for platinum investing is the ETFS Physical Platinum Shares (NYSEArca: PPLT). According to the World Platinum Investment Council, South Africa, the largest producer of platinum and home to about 80% of the world’s proven platinum reserves, has experienced a precipitous fall in platinum investments from an annual $3 billion in 2008 to $1 billion in 2015, reports Emiko Terazono for the Financial Times.
Investors mulling positions in palladium should consider the ETFS Physical Palladium Shares (NYSEArca: PALL). There are good reasons to consider platinum and palladium ETFs. Fundamentals also support the palladium outlook as the market remains in a supply deficit for the past four years, with another deficit on track in 2016.
“After underperforming gold in 2016, platinum has now overtaken the yellow metal with a year to date advance of a shade under 34%. A chunk of those gains came just the last week with the spot price climbing 6%. The precious metal was up 12.7% in July and started August with a bang to exchange hand $1,162 an ounce in early afternoon trade on Monday, making it the best monthly performance since 2012,” reports Frik Els for Mining.com.[related_stories]
Although platinum is not as heavily traded as gold or silver, it is the third-most traded precious metal in the world and it is more scarce than its more popular rivals. Industry observers also believe that platinum companies have overextended operations during the commodities boom in prior years and have suffered from an oversupplied market as a result.
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Investors considering ETFs such as PALL and PPLT should be aware of the role a pair of well-known emerging markets play with palladium and platinum prices.
“Platinum and palladium prices tends to be volatile thanks in part to a highly concentrated supply environment. Together Russia and South Africa control between 70% and 80% of the world’s supply of PGMs. The structure of supply has not altered in any substantial way since the 1970s when platinum and later palladium came to the fore as an important part of the world’s automobile industry,” adds Mining.com.
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ETFS Physical Platinum Shares
Tom Lydon’s clients own shares of GLD.
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.