In January 2010, ETF Securities launched two new precious metals ETFs, the Physical Platinum ETF (PPLT) and the Physical Palladium ETF (PALL). Each now has about $700 million in assets in the form of physical metal.
But these ETFs aren’t the only funds in this sector. There are a variety of other palladium and platinum ETFs that trade outside the U.S.
So how much palladium and platinum are being held in all these ETFs? Well a lot more than last year, according to Johnson Matthey, a leading platinum group metals distributor.
Here are some charts that show ETF holdings for each metal ending in March 2011. Note that these charts show the holdings for all of the ETFs, not just the ones that trade in the United States.
The percentage of supply figures are based on Johnson Matthey’s 2010 worldwide supply estimates. To be clear, the supply percentages are not based on all the platinum or palladium that exists in the world, just based against 2010’s projected supply statistics.
Still it’s interesting to see that worldwide platinum and palladium ETFs held almost double what they held in early 2010 as of March 2011 – and that the holdings represent a significant percentage of the overall market.
For perspective, here’s a price chart of both metals.
And here’s a chart showing the ratio of palladium to platinum, reflecting palladium’s outperformance against platinum.
It does seem bullish that investors are taking positions in these metals. But these markets can be thin. And let’s face it. It’s a lot easier to hit the “sell” button to dump shares of an ETF than it is to sell one’s physical holdings.
And here’s a chart showing the ratio of palladium to platinum, reflecting palladium’s outperformance against platinum.
It does seem bullish that investors are taking positions in these metals. But these markets can be thin. And let’s face it. It’s a lot easier to hit the “sell” button to dump shares of an ETF than it is to sell one’s physical holdings.
So although Johnson Matthey reports supplies of both metals are tight, if investors get fickle, outflows from these ETFs could put at least temporary pressure on platinum and palladium prices.
Disclosure: I am long PPLT, PALL.
