Platinum ETFs and ETNs Expected To Shine (PPLT, PGM, PTM, PLTM)

Increases in investment demand, a recovery in automotive sales and further tightening of emission standards, paint positive picture for the demand of platinum which is expected to support prices of the metal.

Industrial demand for platinum is expected to increase as economies around the world continue to grow due to its versatility, which is boosting its appeal amongst investors.  Platinum plays a significant role in electronics in that it is used in the production of hard disk drive coatings and fiber optic cables.  As demand for personal computers remains elevated around the world and is expected to further increase as personal incomes rises in developing countries, demand for platinum will likely see positive support.

Demand for platinum is expected to be further supported from a recovery in automotive sales as well as the passage of stricter emissions and regulations on automobiles in the United States, Europe and Asia. In Europe, the region is moving to fully implementing regulation on emissions from diesel engines and in Asia sales of automobiles are expected to remain healthy.  A combination of these trends is likely to offer positive demand support for platinum due to its use in vehicle exhaust catalysts which control a vehicle’s emissions.

A third force that is likely to give positive support to the demand of platinum is increased demand for jewelry.  The demand for platinum jewelry has steadily been increasing around the world but most recently is witnessing spiked demand in China.  As for the near future, this demand in China is expected to be sustainable, if not even increase, as wages and personal disposable income is expected to rise. 

These forces that are likely to bolster demand for platinum are expected to cause a supply and demand imbalance which is expected to push prices of the metal up.  From a supply perspective, supplies of newly mined platinum are expected to remain insufficient to satisfy demand and the supplies of recycled platinum are slowly dwindling away.   

One can gain access to the platinum markets through the following:

  • ·         ETFS Physical Platinum Shares (NYSE:PPLT)
  • ·         iPath DJ-UBS Platinum TR Sub-Idx ETN (NYSE:PGM)
  • ·         UBS E-TRACS Long Platinum TR ETN (NYSE:PTM)
  • ·         First Trust ISE Global Platinum Index (NYSE:PLTM)

Although an opportunity seems to exist in the metal, it is equally important to consider the inherent risks involved with investing in it.  To help protect against these risks, the use of an exit strategy which identifies specific price points at which an upward trend could come to an end is of important.  Such a strategy can be found at http://www.smartstops.net/.

Written By Kevin Grewal from Smart Stops

Kevin Grewal serves as the editor at www.SmartStops.net, where he focuses on mitigating risk and implementing exit strategies to preserve equity. Additionally, he is the editor at The ETF Institute, which is the only independent organization providing financial professionals with certification, education, and training pertaining to exchange-traded funds (ETFs). Prior to this, Grewal was an analyst at a small hedge fund where he constructed portfolios dealing with stock lending, exchange-traded funds, arbitrage mechanisms and alternative investments. He is an expert at dealing with ETFs and holds a bachelor’s degree from the University of California along with a MBA from the California State University, Fullerton.

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