Platinum ETF &
With the tremendous growth and success of other Commodity ETF products the past several years it was inevitable that they would branch out
from the Mega Funds (Gold, Silver, Oil & Gas) into some of the niche commodities. Platinum is definitely
one of the more popular niche metals but remains a relatively small market with annual production of only about
PPLT - ETFS Physical Platinum
ETF is similar to their predecessors the Physical Gold ETF and Physical Silver ETF which are also from ETF Securities
LTD. Since this fund is backed by actual physical platinum it raised concern among platinum users that it
would cause a price spike since it's a relatively small market. The goal of the fund is to deliver the
performance of cash platinum price fluctuations minus fees and expenses.
Each PPLT share is backed by approximately 1/10th ounce of physical platinum which
is stored in London and Zurich on behalf of the trust. According to
the prospectus each platinum bar is numbered and is reported daily on the ETFS web site.
Average daily trading volume is around 75,000 shares making it the
most liquid Platinum ETF or ETN. This is much less liquid than other precious metal etfs but still
adequate liquidity for investing or trading.
The annual expense ratio is .60% (60 Basis Points)
PPLT Price Performance Since Inception 1/8/2010
As you can see by comparing PPLT to Cash Platinum below it has tracked the price of cash very accurately.
Here is a comparison of PPLT to GLD since inception. As you can see Platinum has underperformed gold by
nearly 15% in the past 11 months due to the fact that industrial demand for platinum has been weak.
Platinum ETN Products
There are also a few Platinum ETNs that track the price movement of Platinum related indices. These ETNs have a
bit more credit risk but if you don't mind the fact that it's not backed by actual Platinum they may be a
consideration as well.
PTM - UBS E-TRACS Long Platinum Total Return ETN seeks to track (net of expenses) the
UBS Bloomberg CMCI Platinum Total Return Index. As you can see from the chart
below PTM has been tracking the performance of PPLT quite closely since it (PPLT) began
However, with an average daily trading volume of only 29,691 shares /day (as of
12/21/2010) which is less than 40% of PPLT and an expense ratio of .65% (65 Basis Points) I'm not
sure there is any incentive to give up the backing of the actual physical platinum. There are often
trade offs between two different ETF / ETN products but in this case there appears to be no advantage to
buying PTM. This includes price performance which you can judge for yourself in the chart
PPTL Performance Since Inception VS PTM
Chart begins on 1/08/2010 the
first trading day of PPLT
PGM - iPath Dow Jones-UBS Platinum Subindex Total Return ETN is
similar in structure to PTM in that it tracks a platinum index and is structured as an Exchange Traded
Note. Looking at the chart below comparing PGM to PPLT you can see that PGM has underformed
over the life of PPLT.
Additionally, as of 12/21/2010 it only had an average daily trading volume of
18,263 which is less liquid than the other two products. The annual fee is listed at .75% (75 Basis Points)
which is slightly higher as well. These disadvantages have lead to little growth in trading volume over the
past 11 months as the average trading volume for PPLT has grown dramatically.
PPLT Performance Since Inception VS PGM
Chart begins on 1/08/2010 the first trading day of PPLT
Short Platinum ETF & ETN
PTD - UBS E-TRACS CMCI Short Platinum ETN is the only product currently available to gain
inverse exposure to platinum prices. It is the inverse of the PTM ETN but be careful with this on as it is
extremely illiquid at the time of this writing and didn't even trade today.
The annual expense ratio is .65% (65 Basis Points)