Tag Archive | PPLT

How Investors Can Profit From Rising Platinum Prices

by Tony Daltorio, contributing writer

Even after a sharp sell-off on commodities prices, the spot price of platinum remains within reach of a two-year high. That high was hit last month at around $1,870 per ounce.

The consensus in the industry is for higher prices in the coming years. And this is despite the disaster in Japan, whose automotive industry is one of the biggest consumers of the precious metal.

Why so much bullishness?

 The main reason investors, analysts and those in the industry point to is the challenges facing South Africa’s platinum mining companies. South Africa is the world’s biggest producer of the metal. It produced 4.6 million of the 6 million ounces mined in 2010.

 Problems in South Africa

 Some metals have seen a spectacular appreciation in dollar terms. For instance, palladium has quadrupled from its lows in late 2008.

 However, the prices South African miners receive are not keeping pace with costs.

 A basket of platinum, palladium and rhodium weighted for the level of the average South African miner’s production has risen just 4 percent in rand terms in the past 12 months. This is according to Walter de Wet, head of commodities research at Standard Bank.

 That compares with cost rises of 8-9 percent in wages, 25 percent in electricity and 18 percent in fuel.

 Because the mining companies pay costs in a strong currency but take payments in a weak currency, the rand’s strength against the dollar erodes earnings.

 The rapid increase in costs means prices are unlikely to fall far from current levels, most analysts believe.

And let’s imagine the scenario where platinum prices stay steady or even fall. It won’t be a pretty picture. Leon Esterhuizen, mining analyst at RBC Capital Markets, puts it this way: “If we get sideways prices for even a year you will see [mine] shutdowns.” He added that the big platinum producers are “running out of [profit] margin”.

 Supply Constraints

 Johnson Matthey, in its annual report, also stated that platinum prices would not fall far from current levels of $1,765 per ounce.

 Its annual report estimates a net surplus of just 20,000 ounces of platinum at the end of 2010. This is down from a surplus of 635,000 ounces the prior year. The drawdown was due to last year’s recovery in car manufacturing.

 But even if the price of the metal does rise, do not expect the normal supply side response.

 Due to the geological freak of nature, most platinum production will continue to come from South Africa and Zimbabwe. Although it should be mentioned that production is increasing in both Russia and North America.

 With the notorious power shortages in South Africa, the mining companies simply do not have enough reliable electricity to expand production at their mines. This in itself will support platinum prices.

 Platinum Investments

 For investors looking to profit from rising platinum prices, perhaps the best way is through the use of exchange traded funds. One such ETF is backed by actual physical platinum. It is the ETFS Physical Platinum Shares (NYSE: PPLT).

 If one does purchase PPLT, an investor should keep in mind the well-known volatility of precious metals day-to-day prices  If one does purchase PPLT, an investor should keep in mind the well-known volatility of precious metals day-to-day prices. Make sure to properly manage your risk via position sizing.  A free calculator is available at SmartStops.net.. It’s the way all intelligent investors should manage risk in our 21st century markets.  . 

 as posted at:  http://www.minyanville.com/businessmarkets/articles/platinum-commodities-prices-commodity-prices-precious/5/31/2011/id/34862

 

 

A New ETF To Play Gold’s Appeal

As the appeal for commodities, in particularly, gold continues to rise, ETF provider, ETF Securities recently announced another first-to-market ETF, the ETFS Physical Asian Gold Shares (AGOL).

AGOL is the first U.S. precious metals product to be vaulted in Asia as its custody will store all of its physical gold bars in secure London Bullion Market Association approved vaults in Singapore, as stated in its prospectus.  From an investment perspective, the objective of AGOL is to reflect the price performance of reflect the price performance of physical gold, less trust expenses, while carrying an expense ratio of 0.39%.  Read More…

Platinum ETFs Likely to Remain Elevated

Platinum has witnessed a nice upward trend in 2010 and increased demand from the heavy-duty transportation sector and the industrial sector are expected to provide further positive price support to platinum-based exchange traded funds (ETFs) like the ETFS Physical Platinum Shares (PPLT), iPath DJ-UBS Platinum TR Sub-Idx ETN (PGM), UBS E-TRACS Long Platinum TR ETN (PTM) and the First Trust ISE Global Platinum Index (PLTM).

A primary driver behind the expected elevated demand for catalytic converters made of platinum is due to their ability to reduce noxious vehicle emissions.  According to the Wall Street Journal, Johnson Matthey, who controls nearly one-third of the market for platinum and palladium-coated catalytic converters, witnessed a 72% increase in sales of heavy-duty diesel catalytic converters during the first six months of the year as catalyst demand increased.  Read More…

A New ETF To Play Precious Metals

As the appeal for precious metals continues to prevail, ETF provider, ETF Securities, announced that its newest product, the ETFS Precious Metals Basket (GLTR), will begin trading on the NYSE Arca tomorrow.

This new ETF will be the first of its kind enabling investors to gain access to physically backed gold, silver, platinum and palladium all in one security. The actual gold, silver, platinum and palladium bullion that the ETF is backed by is expected to be held by the trust, vaulted in London and Switzerland and inspected biannually by the independent metal assayer, Inspectorate International.  Read More…

ETF Securities Witnesses Influx Of Assets

As the investment demand for precious metals continues to remain high, ETF Securities, the first US ETF provider to provide investors with access to a full suite of precious metal ETFs, recently surpassed the $2 billion mark for total assets under management. Read More…

Platinum ETFs and ETNs Expected To Shine

Increases in investment demand, a recovery in automotive sales and further tightening of emission standards, paint positive picture for the demand of platinum which is expected to support prices of the metal.

Industrial demand for platinum is expected to increase as economies around the world continue to grow due to its versatility, which is boosting its appeal amongst investors.  Platinum plays a significant role in electronics in that it is used in the production of hard disk drive coatings and fiber optic cables.  As demand for personal computers remains elevated around the world and is expected to further increase as personal incomes rises in developing countries, demand for platinum will likely see positive support.

Demand for platinum is expected to be further supported from a recovery in automotive sales as well as the passage of stricter emissions and regulations on automobiles in the United States, Europe and Asia. In Europe, the region is moving to fully implementing regulation on emissions from diesel engines and in Asia sales of automobiles are expected to remain healthy.  A combination of these trends is likely to offer positive demand support for platinum due to its use in vehicle exhaust catalysts which control a vehicle’s emissions. Read More…

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