The Aberdeen Standard Platinum Shares ETF (NYSEArca: PPLT) is up 7.11% year-to-date and robust demand is seen as one of the factors boosting platinum this year.
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.
“Platinum demand rose by 32 percent year-on-year during the first quarter of 2019 thanks to a substantial increase in exchange-traded fund (ETF) investment, the World Platinum Investment Council (WPIC) states in its latest quarterly platinum report,” reports Investing News.
Investors’ appetite for platinum via ETFs offset declines in demand for the white metal in other key markets.
“The surge in investment demand offset declines in the automotive, jewelry and industrial sectors, with total investment demand reaching 765,000 ounces,” reports Investing News, citing the WPIC. “Of those 765,000 ounces, 690,000 ounces were owned by ETF holdings.”
Pursuing Platinum as an Investment
However, with respect to the other precious metals, platinum presents a value proposition for seasoned investors and beginning investors looking to shore up their portfolios with commodities.
On the demand side, platinum will continue to enjoy robust industrial demand. Additionally, platinum jewelry is starting to enjoy a jump in demand as well, especially among the Millennial generation – younger generations in traditional gold-centric economies like India saw 2017 platinum jewelry sales jump 25%, according to Platinum Guild International.
Historically, platinum prices have exhibited a strong correlation the South African rand currency – as the ZAR appreciates, the higher costs of production and lower U.S.-dollar-denominated platinum prices would put pressure on miners, causing slowdowns in production.
“As per the WPIC’s report, the majority of the ETF growth came from South Africa, where investors added 418,000 ounces to their holdings,” according to Investing News. “The UK had the second largest increase in ETF holdings, as the European country produced 178,000 ounces during Q1. Meanwhile, the US and Switzerland increased their access to platinum investing via ETFs by 79,000 ounces and 18,000 ounces, respectively.”
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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.