A Precious Metal ETF to Hedge Risks, Ride Cyclical Trends

“Lack of transparency in physical holdings coupled with a small, concentrated market increases the vulnerability to volatility. This has made fundamental data a challenging indicator to help explain platinum price move and returns,” Gold said.

Looking ahead, Gold expects a fair value appreciation in gold prices by year-end, along with a 5% gain in rand currency, 3% increase in global industrial production and 10% rise in emerging market equities, which should all help contribute to stronger platinum prices.

“This would provide a modest 6% increase from current platinum levels,” Gold said.

Given the current fair values, expectations for ongoing global recovery in growth and manufacturing, and a record discount to gold prices, the ETF Securities analysts believes that downside risk is overshadowed by potential upside.

ETF investors interested in accessing platinum price movements can turn to the precious metal-specific ETFS Physical Platinum Shares (NYSEArca: PPLT). Additionally, investors can also use the ETFS Physical Precious Metals Basket Shares (NYSEArca: GLTR) as a catch-all of silver, gold, platinum and palladium if one is uncomfortable with a single, targeted precious metal play.

For more information on the platinum market, visit our platinum category.