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The weakness in the global financial markets has helped gold to recover its sheen in 2016. A tumultuous global economy including overall growth issues and Brexit fears coupled with the global oil market turbulence has lifted safe-haven demand (read: Gold ETF Investing: 10 Facts Investors Need to Know).
The jump in gold prices was also supported by plunging interest rates on a global scale. Earlier this month, 10-year note yields dropped to 1.639%, the lowest level in the last three years. Meanwhile, government bond yields in Japan, Germany and the U.K. also touched record lows. With the Fed not expected to raise interest rates in the near term, the rally is expected to continue (read: Dovish Fed Trims U.S. Outlook: ETFs to Buy).
Is Platinum Overlooked?
As per a report by TheStreet, the price of platinum is currently at its lowest level relative to gold in 30 years. Platinum is currently trading at a discount of almost 30% as compared to gold. This is surprising considering it generally trades at a premium of 34% if we see the past 10 years’ data. While the popular gold ETF, SPDR Gold Shares (GLD - Free Report) , is up more than 20% this year, platinum ETF ETFS Physical Platinum Shares ETF (PPLT - Free Report) has not gained more than 9% so far this year as of June 17, 2016.
But history they say repeats itself and the appreciation of gold prices over platinum is not likely to be sustainable over the long run. It is widely expected that the relationship between platinum and gold will revert to the mean. This could happen in two ways – either platinum heads higher or gold falls.
However, with the global stock market flooded with bouts of volatility and uncertainty and an ultra-low interest rate, the rally in gold prices is likely to continue (read: Gold ETFs to Continue Their Bull Run: Here's Why?).
Thus, it’s more likely that platinum prices will surge. This is also supported by the demand supply situation in the platinum market. Supply for the world's third-most traded metal is expected to register a 5% fall this year, thanks to a decline in supply from South Africa, a major supplier of platinum, accounting for 70% of the global production.
Unlike gold, platinum is used for industrial purposes. The automobile industry alone is responsible for about 40% of the world's platinum demand. With auto industry demand for platinum expected to increase by 2% this year, demand for platinum is expected to head north. As per a report from investing.com, in stark difference to a surplus of 54.4 thousand ounces in 2015, this year a global platinum deficit of 195 thousand ounces is expected.
Considering that physical platinum is not liquid, PPLT is an attractive option for investors looking to get an exposure to platinum prices (see all Precious Metals ETFs here).
PPLT in Focus
Launched in 2010, this ETF tracks the performance of platinum’s price and is quite a popular fund in the precious metals space managing assets worth $488 million. The product invests in bars of platinum and holds them in a secure European facility on behalf of the custodian, JPMorgan Chase Bank (read: Forget Chocolates, Gift Your Valentine These Precious Metal ETFs).
The product charges a decent 60 basis points a year and has an average volume of more than 46,000 shares traded a day.
There are also a few ETNs in the platinum space including iPath Bloomberg Platinum Subindex Total Return ETN and the ETRACS CMCI Long Platinum Total Return ETN . However, these are not as popular as PPLT, as evident by AUM of $7.5 million and $20.7 million, respectively.
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After Gold, is it Turn for Platinum ETF to Shine?
The weakness in the global financial markets has helped gold to recover its sheen in 2016. A tumultuous global economy including overall growth issues and Brexit fears coupled with the global oil market turbulence has lifted safe-haven demand (read: Gold ETF Investing: 10 Facts Investors Need to Know).
The jump in gold prices was also supported by plunging interest rates on a global scale. Earlier this month, 10-year note yields dropped to 1.639%, the lowest level in the last three years. Meanwhile, government bond yields in Japan, Germany and the U.K. also touched record lows. With the Fed not expected to raise interest rates in the near term, the rally is expected to continue (read: Dovish Fed Trims U.S. Outlook: ETFs to Buy).
Is Platinum Overlooked?
As per a report by TheStreet, the price of platinum is currently at its lowest level relative to gold in 30 years. Platinum is currently trading at a discount of almost 30% as compared to gold. This is surprising considering it generally trades at a premium of 34% if we see the past 10 years’ data. While the popular gold ETF, SPDR Gold Shares (GLD - Free Report) , is up more than 20% this year, platinum ETF ETFS Physical Platinum Shares ETF (PPLT - Free Report) has not gained more than 9% so far this year as of June 17, 2016.
But history they say repeats itself and the appreciation of gold prices over platinum is not likely to be sustainable over the long run. It is widely expected that the relationship between platinum and gold will revert to the mean. This could happen in two ways – either platinum heads higher or gold falls.
However, with the global stock market flooded with bouts of volatility and uncertainty and an ultra-low interest rate, the rally in gold prices is likely to continue (read: Gold ETFs to Continue Their Bull Run: Here's Why?).
Thus, it’s more likely that platinum prices will surge. This is also supported by the demand supply situation in the platinum market. Supply for the world's third-most traded metal is expected to register a 5% fall this year, thanks to a decline in supply from South Africa, a major supplier of platinum, accounting for 70% of the global production.
Unlike gold, platinum is used for industrial purposes. The automobile industry alone is responsible for about 40% of the world's platinum demand. With auto industry demand for platinum expected to increase by 2% this year, demand for platinum is expected to head north. As per a report from investing.com, in stark difference to a surplus of 54.4 thousand ounces in 2015, this year a global platinum deficit of 195 thousand ounces is expected.
Considering that physical platinum is not liquid, PPLT is an attractive option for investors looking to get an exposure to platinum prices (see all Precious Metals ETFs here).
PPLT in Focus
Launched in 2010, this ETF tracks the performance of platinum’s price and is quite a popular fund in the precious metals space managing assets worth $488 million. The product invests in bars of platinum and holds them in a secure European facility on behalf of the custodian, JPMorgan Chase Bank (read: Forget Chocolates, Gift Your Valentine These Precious Metal ETFs).
The product charges a decent 60 basis points a year and has an average volume of more than 46,000 shares traded a day.
There are also a few ETNs in the platinum space including iPath Bloomberg Platinum Subindex Total Return ETN and the ETRACS CMCI Long Platinum Total Return ETN . However, these are not as popular as PPLT, as evident by AUM of $7.5 million and $20.7 million, respectively.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>