The United States’ first platinum exchange traded fund (ETF) is in registration. Ahead of the fund’s launch are some warnings for investors about the popular metal.
Investors who are bullish on platinum now have an ETF in the works that could create demand for the metal, as each share must have a corresponding quantity of the precious metal behind it, Liam Denning for The Wall Street Journal explains. The filing for the U.S. fund was made by ETF Securities, which has a platinum fund in London right now.
Since the prospective ETF first filed, platinum is up 5%, and has been up 51% since its November low. The metals had been suffering, because the auto industry hit platinum where it hurts – catalytic converters for cars make up 55% of the world’s total platinum demand.
But the impact of such a fund on the platinum market here can be hard to assess. ETF Securities launched a London-based ETF focused on platinum, when roving blackouts plagued South Africa shortly thereafter. This disrupted supply and made it a challenge to determine the impact the fund had on platinum’s availability.
Despite cutbacks announced by miners, a surplus is expected in 2009 and possibly 2010. A new ETF could help continue to fuel that demand, but there’s no guarantee that the new fund will be approved. For now, it’s watch and wait.
A few ways to access platinum in the United States now:
- E-TRACS UBS Long Platinum ETN (PTM): up 25.8% year-to-date
- iPath Dow Jones AIG Platinum Sub-Index ETN (PGM): up 26.8% year-to-date
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.