ETFS Platinum/Palladium ETFs (PALL)
This new fund from Wall Street is sure to shake up the regulators and traders alike. Ahead of its launch, one palladium producer rose nearly 16% due to the belief that these new funds will create huge amounts of artificial demand.
The Regulators
I’m truly shocked that the SEC and the CTFC have even considered approving the new ETFS Platinum Trust (PALL) which will back its fund with 100% physical platinum. As everyone well knows, platinum is one of the rarest of precious metals and is in constant supply problems with a see-sawing mining and automotive industry that produce and use most of the platinum ever mined. This new fund will have a huge impact on the metals markets, particularly because of how hyped it is. Currently, investors have access to gold, silver and even industrial metals but have no retail access to platinum, which is the rarest.
How Much Demand
These new funds could potentially generate literally years worth of demand should platinum prove to be a popular investment grade metal. As it stands, most of the metal is utilized in the production of catalytic converters and in fine jewelry, a market that can afford to pay high prices. However, should ETFSecurities hit a home run with this fund, demand could send prices soaring with only 3.6 million ounces of platinum produced each year. With a price tag of $1560 per ounce, the total value of all the platinum mined each year is roughly one-tenth of the current value of the worlds largest gold ETF, Gold Shares (GLD).
Hype or History’s Best Investment
With millions of ounces consumed each year in the automotive and jewelry industries, platinum’s supply is seriously running short. Though, with platinum’s ties to the auto industry, it will be interesting to see how much investors are willing to stake on a commodity that derives most of its demand from an ailing industry.
