Potential launch of first U.S. ETF backed by Platinum holds promise

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April 17, 2009 9:09am ETF BASIC NEWS

platinum11These ETFs would be a “huge boon for retail investment into the PGMs (platinum group metals),” said Scott Wright, an analyst at financial-services company Zeal LLC.

Indeed, the timing may be just right. Prices for platinum and palladium have been climbing from lows hit late last year.

Platinum prices have gained more than 60% from their low in October of last year to trade as high as $1,247 an ounce this week on the Comex division of the New York Mercantile Exchange. Palladium’s up close to 50% from its December low to a high above $242 an ounce this week.

ETF Securities USA will sponsor the ETFS palladium trust and the ETFS platinum trust, according to separate Securities and Exchange Commission filings dated April 2.

The sponsor, the largest provider of exchange-traded commodities, declined to comment on the filings.

Still, it’s easy to speculate over the reason behind the move.

Setting an example

In the U.S., the silver- and gold-backed ETFs have “ultimately reshaped the fundamentals of the precious metals markets,” said Wright.

The launch of the iShares silver ETF “happened in the face of aggressive opposition from the industrial sector,” he said. It was launched in April of 2006.

But now the ETF holds over 270 million ounces, “the equivalent of nearly half a year’s worth of global mined production,” said Wright.

And the SPDR Gold Trust, launched in late 2004, is now one of the largest ETFs in the world, he said. It’s the sixth-largest gold owner and gold held in the trust recently surpassed the quantity held by the Swiss central bank, he said.

 

 



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