UBS Platinum ETNs Step into the On-Deck Circle

By Heather Bell

At long last, it looks like U.S. investors are going to have access to platinum via an exchange-traded product. The precious metal was largely inaccessible to those who did not want to participate directly in the futures market, but the launch of two exchange-traded notes, the E-TRACS UBS Long Platinum ETN (NYSE: PTM) and E-TRACS UBS Short Platinum ETN (NYSE: PTD), appears to be imminent on the NYSE.

A while back, Barclays Global Investors had sought to launch a platinum-based exchange-traded fund similar to its asset-backed gold and silver ETFs. However, rumors were that it faced heated opposition from the platinum industry, which was concerned that a platinum ETF that hoarded physical platinum might drive up the price of the shiny stuff.

Why would producers be against that? Because despite perceptions, platinum is really an industrial metal, used in the manufacture of catalytic converters among other things. The producers were worried that if the price became too volatile, industrial users would seek other, cheaper raw materials.

The new ETNs sidestep that concern because they are likely based on futures contracts, which are typically cash-settled, and so will not have an immediate effect on the supply and demand of platinum.

Currently, ETF Securities, a European firm, has listed three platinum funds offering short, long and double-long exposure on European exchanges. Those include a physical platinum fund (the "long" fund) and two exchange-traded note products (the leveraged and short funds). They are the only products available to investors who wish to invest in platinum without getting directly involved in the futures markets, and they are not available to U.S. investors.

The UBS (UBS) ETNs will track the UBS Bloomberg CMCI Platinum Total Return Index. The E-TRACS family of ETNS already has several commodities-based ETNs covering different sectors as well as gold and silver currently trading, all of them tracking the UBS Bloomberg CMCI and its subindexes. The NYSE Web site had listed today as the launch date for PTM and PTD, but the roll-out appears to have been delayed. It's a fairly safe bet though that they will be making their debut any day now.

• More on choosing the right ETF/ETN

Comments

[QVM Group:]

"Because despite perceptions, platinum is really an industrial metal, used in the manufacture of catalytic converters among other things."

Heather,

Do you know what percentage of world platinum consumption is for catalytic converters? I don't and would like to know.

If the electric car movement, and the natural gas and fuel cell car movement were to gain significant market share, would that reduce plantinum demand sufficiently to create an small investment theme around platinum?

Richard Shaw
QVM Group LLC

2008 May 08 10:51 AM

[Kaye Refini...:]

Richard..I came across this post and figured I can help you out..Check out Johnson Matthey....matthey.com..they should be able to help you out as far as what you are looking for...hope this helps.....David

2008 May 08 12:03 PM

[Marol:]

? It sounds like their long fund would have physical platinum, similar to GLD, and would thus likely contribute -- I have a hunch it will be popular -- to shortage and/or price rise.

2008 May 08 03:15 PM

[Marol:]

Can you let us know when they do ocme out, preferably beforehand? And,
WHAT THEIR SYMBOLS ARE?

Thanks!

2008 May 08 03:17 PM

[User 154659:]

Marol,
1) The symbols are listed in the article (PTD, PTM).
2) Neither note will hold physical platinum if they linked to futures contracts as they would cash settle. (also in the article).
3) The notes will most likely be described on ubs.com/e-tracs when they start trading.

2008 May 08 05:07 PM

[Marol:]

Umm . . . I must have been really sleepy (in fact, I remember I was). For some reason I was convinced there were three offerings. But it explains why I didn't have the second set of questions to start with!

THANK YOU, 154659, for 1) answering, and 2) NOT BEING RUDE!!

2008 May 09 01:50 PM

[David Jackson:]

Richard, try doing a search in the box top right for "catalytic converters" -- the results are interesting. You can also filter them by transcripts only.


On May 08 10:51 AM Richard Shaw wrote:

> "Because despite perceptions, platinum is really an industrial metal,
> used in the manufacture of catalytic converters among other things."
>
>
> Heather,
>
> Do you know what percentage of world platinum consumption is for
> catalytic converters? I don't and would like to know.
>
> If the electric car movement, and the natural gas and fuel cell car
> movement were to gain significant market share, would that reduce
> plantinum demand sufficiently to create an small investment theme
> around platinum?
>
> Richard Shaw
> QVM Group LLC
>

2008 May 12 03:43 AM