Gold and the related exchange traded funds are performing well while palladium and its ETF are on torrid paces this year, but the Aberdeen Standard Platinum Shares ETF (NYSEArca: PPLT). Some commodities market observers believe that is poised to change.
Platinum is primarily used in catalytic converters in diesel-powered automobiles, but environmental concerns tamped down demand for the precious metal. As such, the price of platinum has fallen over the years amid weaker demand and excess supply.
“Gold futures logged a more-than-six-year high at $1,420.90 on July 3. At $1,406.70 an ounce on Thursday, they trade nearly 10% higher year to date,” reports Myra Saefong for Barron’s. “Palladium at $1,559.10 after a record high of $1,588.10 Wednesday, is up about 30% so far this year. Platinum, at $830.90, trades more than 40% lower than gold and is nearly half the cost of an ounce of palladium. Platinum futures’ all-time high was nearly $2,300 in early March 2008.”
With respect to the other precious metals, platinum presents a value proposition for seasoned investors and beginning investors looking to shore up their portfolios with commodities.
Perusing PPLT ETF
PPLT is higher by about 1% over the past month and if the platinum ETF adds another 1.25%, it will reclaim its 200-day moving average, a potentially bullish signal. Market observers expect there to be another supply deficit, though small, this year.
“Platinum prices, she says, have ‘turned the corner’ after falling nearly 15% in 2018. Futures prices based on the most-active contracts are trading nearly 4% higher this year. Platinum has been in surplus for six of the past nine years,” according to Barron’s.
On the demand side, platinum will continue to enjoy robust industrial demand. Additionally, platinum jewelry is starting to enjoy a jump in demand as well, especially among the Millennial generation—younger generations in traditional gold-centric economies like India saw 2017 platinum jewelry sales jump 25%, according to Platinum Guild International.
Rhona O’Connell, head of market analysis for Europe, Middle East, and Africa, and Asia at INTL FCStone, “expects to see higher prices for platinum next year, possibly in the low- to mid-$900s. With support currently in the $800 region, prices may be looking at a roughly 13% rise over the next 12 months, she says,” reports Barron’s.