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Soaring demand for platinum and palladium ETFs is helping reignite a PGMs bull market

by , 23 May 2014

Platinum-backed exchange traded funds (ETFs) are sucking up vast quantities of platinum group metals (PGMs). One of the main drivers behind this was the launch of Absa's NewPlat last year. It's been very successful. Add to that the addition of two palladium-backed ETFs and palladium holdings are also rising. The demand for PGM-backed ETFs is adding to the unprecedented demand for these metals. Demand that supply is struggling to keep up with. Let's take a closer look at what's going on…

Soaring investment demand for platinum and palladium

Investment demand for PGMs is gaining momentum.

In 2013, investment demand for platinum soared 9.1%. The main factor for this rise was the launch of Absa’s NewPlat ETF. Investors flocked to get their share of platinum.

By the end of last month, all the platinum-backed ETFs held almost 89,000 ounces. This is a staggering amount given that in 2007 that figure was zero.

Last year, investment demand fell 84%. But things have changed, Jeff Clark in The Crux explains. The recent launch of two different palladium ETFs has helped push global palladium holdings to record high levels. These ETFs are Absa’s NewPall and Standard Bank’s Palladium Linker.

And like platinum, there was no investment demand for palladium seven years ago.

Strong investment demand for platinum and palladium is adding to the deficit of these metals.

Sheer investor demand for PGM ETFs will help push PGMs higher

The PGMs market is under severe pressure. The four month long strike, which is crippling the production of platinum, is adding to an already exhausted market.

And even if the strike ended tomorrow, it wouldn’t help fix the supply deficit.


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Platinum and palladium prices may ease when the strike eventually ends, but you could use this as a buying opportunity.

Independent precious metals consultancy GFMS predicts the platinum price at up to $1,700 and the palladium price at up to $930 by the end of the year. They’re currently trading at $1,474.50 and $831 respectively.

Prices could go much higher.

So there you have it, why soaring demand for platinum and palladium ETFs is helping reignite a PGMs bull market.

Soaring demand for platinum and palladium ETFs is helping reignite a PGMs bull market
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