Palladium was the toast of the town in precious metals in 2018 and gold is starting to make a resurgence, but Pacific Investment Management Company (PIMCO) suggests giving platinum a second look.
Platinum prices fell 14 percent last year and is currently priced at just over $800 per ounce compared to gold and palladium, which are both over $1,300 an ounce.
“Platinum is relatively unloved and relatively cheap compared to other precious metals,” said Nic Johnson, Pimco’s managing director and portfolio manager for commodities. “It would only take a rotation of a few percent of the assets in gold exchange-traded funds moving to platinum to really have a big impact on platinum supply-demand balances and prices.”
Platinum is primarily used in catalytic converters in diesel-powered automobiles, but environmental concerns tamped down demand for the precious metal. As such, the price of platinum has fallen over the years amid weaker demand and excess supply.
For investors looking for continued upside in U.S. cyclical sectors over defensive sectors, the Direxion MSCI Cyclicals Over Defensives ETF (NYSEArca: RWCD) offers them the ability to benefit not only from cyclical sectors potentially performing well, but from their outperformance compared to defensive sectors.
Conversely, if investors believe that U.S. defensive sectors will outperform cyclical sectors, the Direxion MSCI Defensives Over Cyclicals ETF (NYSEArca: RWDC) provides a means to not only see defensive sectors perform well, but a way to capitalize on their outperformance compared to cyclical sectors.
For more market trends, visit ETF Trends