New ETFs to Be Launched for Platinum and Palladium

ETF Securities USA recently filed with the SEC to launch exchange traded funds covering platinum and palladium. There are currently no exchange traded funds covering these metals available in the United States.

The same firm already offers ETFs for platinum and palladium which trade in Europe. According to the Wall Street Journal, the platinum holdings for the ETF approach 500,000 ounces.

Rumors of a platinum ETF for the US market briefly made the rounds back in May 2007 after the launch of the European ETFs. The rumors were quickly squelched as it was viewed as unlikely that the SEC would approve such a listing. At the time, the world's largest platinum producers were reportedly unsupportive of the idea and pressure from the US auto lobby against the ETF was viewed as likely.

With platinum more than 50% off its peak and auto manufacturers dealing with larger issues, there doesn't seem to be as much resistance this time around.

Here you can view the SEC filings for the proposed platinum and palladium ETFs. The filings indicate that the price per share would be equal to the value of one-tenth of an ounce of each metal. Yesterday, platinum traded at $1,175 and palladium traded at $231. The filings include world supply and demand figures for the metals for the past ten years. In 2008, reported supply exceeded reported demand for both platinum and palladium.

The ETFs would be launched at a time when obtaining physical platinum and palladium for investment continues to be difficult or at high premiums. In order to buy physical platinum in coins or bars, premiums can be $100 or more - if you can find them. The US Mint delayed the 2009 launch of their platinum bullion product the Platinum Eagle. This delay has continued without any update. Physical palladium for investment is usually obtained in bars. The Royal Canadian Mint briefly offered the Palladium Maple Leaf from 2005 to 2007, but ended the program due to low demand.

Disclosure: Long physical platinum.

Comments

[Uppai Mappla:]

As I have commented elsewhere Seeking Alpha, platinum is a safer better than gold (at current prices). If world economy improves, gold will go down and platinum will double. If economy worsens, gold will zoom up first and platinum will follow it as the second precious metal.

So in both scenarios platinum is a safer bet than gold.

Apr 10 03:44 AM

[Dr. O:]

I published a brief SA article on platinum not long ago titled "Is Platinum the New Gold?" My "picture" on SA is an American Platinum Eagle, lol.

There are two platinum ETNs: PGM and PTM. Using Yahoo comparison charts they've both done a good job of tracking the spot price of platinum. However, PGM trades more smoothly, with less spikiness on up days.

ETNs have counter party risk (they are debt instruments backed by the banks that issue them). Nonetheless, for the time being they do the job.

I bought a platinum eagle not long ago, and would like to acquire more closer to spot if I could.

Apr 12 08:45 PM

[JH24:]

Sorry...I disagree Mappla...

Platinum is tied incredibly to the auto sectors around the world and until those come back around, it will make small moves up and big moves back down...

With the incredible amount of inflation coming down the road, the REAL metal to hold is Silver.

Gold will move, Platinum will move, but Palladium will move more than both % wise.

Silver will beat them all....

Count on it.

Apr 13 10:58 AM

[Uppai Mappla:]

JH24, you may just be right about silver since it is historically the runner-up precious metal.

My logic about platinum is that it is a precious metal AND an industrial metal. Silver and gold too have industrial applications but not nearly as platinum.

Platinum is essential not just in auto industry but in many other industries such as glass creation, fibre optics, petroleum, chemicals and so on. More and more industrial applications are being found for platinum, the latest being in fuel cells. So in my view the industrial bull market of platinum has just begun.

Its value in an economic downturn is simply that it is scarce. That's why I think it would follow gold if dollar crashes.

Apr 14 02:31 AM

[Nikhil:]

But why silver ? Its got significant (close to 50% as i recall) industrial demand too, which has been waning. Its just 'poor man's gold' notion which has been pushing it up. Also I dont think there are enough players convinced and gutsy enuf to short the precious metals space (considering where the dollar is headed), specially the cheapest precious metal silver.
But why do you think silver is better, would you play long silver/short gold (or any other precious metal) ?



On Apr 13 10:58 AM JH24 wrote:

> Sorry...I disagree Mappla...
>
> Platinum is tied incredibly to the auto sectors around the world
> and until those come back around, it will make small moves up and
> big moves back down...
>
> With the incredible amount of inflation coming down the road, the
> REAL metal to hold is Silver.
>
> Gold will move, Platinum will move, but Palladium will move more
> than both % wise.
>
> Silver will beat them all....
>
> Count on it.

Jun 03 11:57 PM