The launch of ETF Securities’ Platinum ETF (NYSEARCA:PPLT) earlier this year has proved to be an irresistible lure for investors looking for precious metals exposure. Will it leave gold in the dust? Some say so. Here’s why.
- The demand base for platinum is higher than it is for gold. The balance comes from industries such as chemicals, electrical, glass, petroleum as well as from jewelry, with a big pull coming from the auto industry, explains Devendra Nevgi for DNA India.
- Platinum’s supply-demand balance remains tight as the extraction and mining process is extremely complex and labor-intensive. Much of the supply of platinum comes from South Africa, Russia and Canada, as well as the recovery of scrapped cars.
- Newer stringent regulations requiring manufacturers to cut carbon emissions are more beneficial to platinum then for gold.
- As a strategy, it would make sense to partially switch to platinum from gold as the global economy recovers from a low point, industrial activity further gathers steam and risk appetite increases.
- SPDR Gold Shares (NYSEARCA:GLD)
- ETFS Gold Trust (NYSEARCA:SGOL)
- ETFS Physical Platinum (PPLT)
- First Trust ISE Global Platinum (NASDAQ:PLTM)