Platinum may be a precious metal, but it has more industrial uses than gold (the chief use being the metal used for catalytic converters in cars). For that reason, and because it is traded less than gold, platinum costs more per ounce.
So if you want to make a hybrid infrastructure/precious metals play, platinum might be a good bet. Two new platinum ETFs appeared on the market this past May 2009 that you might want to take a look at.
E-TRACS UBS Platinum ETNs
Actually, these aren’t ETFs strictly speaking, but ETNs (Exchange-traded Notes). The difference is that instead of the ETN purchasing the physical metal itself (for example, as GLD does with gold bullion), these ETNs buy the futures contracts on the metal.
NYSE Arca: PTM
This ETN is a long play on platinum with an MER of 0.65% – not as cheap as many Vanguard ETFs, but still far cheaper than any mutual fund. Canadians should not get the ticker confused with PTM on the TSX, which belongs to Platinum Group Metals Ltd. (a platinum miner you might consider, actually). Closed last (Nov. 17, 2009) at $17.95.
NYSE Arca: PTD
PTD is a short play on platinum, which means that if platinum prices go down, this ETN will perform well. It also has an MER of 0.65%. Closed last (Nov. 17, 2009) at $34.15.
Problems With Platinum
One analyst said that platinum is “like pork belly on steroids” – meaning it is nowhere near as liquid and easy to trade as gold is, because less people are trading it. Because these ETNs are thinly traded, prices can also be extremely volatile and easy for one buyer to push around.
Another potential problem is the very close relation platinum – or the PGM’s (platinum group metals) – has with auto demand and production. According to Jim Steel, platinum analyst at HSBC, more than 50% of platinum and palladium is used for auto converters. This means platinum prices are highly correlated to the auto markets. Traditional vehicles and hybrids consume the most PGMs – all-electric cars wouldn’t need them.
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