The Market Heats Up For Platinum and Palladium ETFs

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March 1, 2010 2:12pm ETF BASIC NEWS NYSE:PALL

platinum-etf“Some investors have been reducing their exposure to platinum and palladium over the past few weeks after the launch of exchange-traded funds backed by the metals helped send prices


 to their highest levels in more than a year. But with a slew of potentially bullish supply-and-demand fundamentals behind the metals—which are used primarily by the auto industry for catalytic converters—as well as a new fund in the wings that would suck even more metal off the market, prices for platinum and palladium are likely headed higher in the longer term,” Matt Whittaker Reports From The WSJ.

 platinum

Whittaker continues to say, “Wealth-management firm Fogel Neale Partners recently sold its holdings in Montana-based palladium and platinum producer Stillwater Mining Co. and the UBS E-TRACS CMCI Long Platinum Total Return exchange-traded note because the firm saw the metal as overbought. However, over the longer term, “platinum is one of [our] favorite commodities right now,” said partner Andrew J. Neale. If prices continue to decline, the firm is likely to come back in and buy the metal, perhaps through the newest exchange-traded platinum fund backed by physical supplies, Mr. Neale said.”

“Since beginning trading in early January, ETF Securities’ ETFS Physical Platinum Shares has racked up more than 280,000 ounces of platinum, while ETFS Physical Palladium Shares has garnered about 470,000 ounces. The numbers are significant because the platinum and palladium markets are relatively small compared with other commodities such as gold or oil. There are only about 1.7 million ounces of platinum and 2.2 million ounces of palladium in open contracts on the New York Mercantile Exchange, compared with 47 million ounces in gold. The new platinum ETF has already soaked up the estimated 2009 platinum surplus of 140,000 ounces and the palladium fund has eaten up a significant chunk of the 655,000-ounce surplus of that metal,”  Whittaker Reports.

ETF Securities notes in its latest filing with the U.S. Securities and Exchange Commission—to which it is applying for permission to launch a fund backed by a basket of precious metals, including the platinum group—that purchasing of metal to back shares “may temporarily increase the market price of gold, silver, platinum and palladium.”

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 Here are some details on the Platinum and Palladium ETFs:

– ETFS Physical Platinum Shares (Ticker: PPLT)

– ETFS Physical Palladium Shares (Ticker: PALL)

Highlights of the New Products:

Unique offering: PPLT and PALL are the first Platinum Group Metal (PGM) products to be launched in the US ETF market and offered to US investors.
Physical Platinum (PPLT) and Physical Palladium (PALL): Each Trust will custody all of its physical platinum and palladium in plate and ingot form in a secure London Platinum Palladium Market (LPPM) (4) approved vault which meet LPPM “good delivery standards”.
Transparency of Holdings: Platinum and Palladium plates and ingots are stored on behalf of each trust will undergo a bi-annual audit performed by an independent external bullion specialist auditor. All identification numbers and audits will be published on www.etfsecurities.com
Exposure into the Industrial Cycle: In addition to having precious metal attributes, platinum and palladium are used as commodities in specific industries such as the automotive industry which gives investors direct exposure into the industrial cycle and overall economic recovery.
ETFS Platinum Trust and ETFS Palladium Trust

The objective of the ETFS Platinum Trust’s (PPLT) shares reflect the performance of the price of Platinum, less the Trust’s expenses. The Trust is open ended and is designed for investors who want a cost-effective (1) and convenient (2) way to invest in Platinum as well as diversify their precious metal holdings. Both products have an expense ratio of 0.60% per annum. (3)

The objective of the ETFS Palladium Trust’s (PALL) shares reflect the performance of the price of Palladium, less the Trust’s expenses. The Trust is open ended and is designed for investors who want a cost-effective (1) and convenient (2) way to invest in Palladium as well as diversify their precious metal holdings.

ETFS Platinum Trust (PPLT) and ETFS Palladium Trust (PALL) are both backed by Platinum and Palladium allocated bullion in plate and ingot form stored in secure vaults in London & Switzerland by the Custodian, JPMorgan Chase Bank, N.A, one of the world’s leading Custodians for precious metals. The Shares represent an interest in physical platinum and palladium bullion owned by the Trust. The physical platinum and palladium allocated bullion of the Trust is subject to minimal counterparty or credit risks, which contrasts with other offerings that achieve bullion exposure through the use of derivatives.

 

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