Julian Murdoch from Hard Assets Investor talks about what it would be like with a Platinum ETF in the marketplace:  Currently, the only ETF that holds physical platinum is ETF Securities’ Physical Platinum (LON:PHPT), putting it in an ideal spot to take advantage of the investor rush to safe havens. During the first quarter of the year, investment inflows grew 82 percent from the previous quarter; as of Sept. 30, the fund held 360,790 troy ounces. During the past week alone, PHPT saw inflows of $29 million.

Rumors of a U.S. physical platinum ETF have been floating in the market for several years, but nothing has materialized—yet. As we reported back in April, ETF Securities filed with the SEC earlier this year to bring platinum and palladium ETFs to U.S. investors, but they’ve taken no public action on the paperwork since then.

The big question is: If a new ETF did open in the U.S., what effect could it have on demand and pricing, especially in a market as small as platinum’s? Would it, as auto companies and industrial users suggest, siphon metals away from the market and therefore raise prices? Let’s run the numbers. Assuming GFMS is correct about the size of the platinum surplus we might see this year (11.3 metric tons), at today’s platinum price of $1364.30/oz., a potential ETF would need to raise $4.96 billion to wipe the surplus out completely.

Considering that’s just a bit bigger than PHPT is currently, it doesn’t seem like much of a stretch to think a new U.S.-based ETF could easily become large enough to swallow up any excess platinum available in the market. Of course, any new ETF wouldn’t start off on day one that large. Besides, investors may be cautious about buying into the metal at the current price level, preferring to wait until a price drop comes. But there is a distinct possibility that in such a small market, another ETF could become a force to be reckoned with.

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