ETFS’ Rhind: Platinum Rally Not Over
February 08, 2013
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[This interview originally appeared on HardAssetsInvestor.com and is republished here with permission.]
William Rhind is managing director of ETF Securities, a leading independent provider of ETFs. The firm, which in 2003 pioneered the world’s first physical gold ETF in Australia, has launched seven physically backed precious metals ETFs in the U.S. Those include the ETFS Physical Platinum Shares (NYSE Arca: PPLT), with nearly $800 million in assets under management. HAI’s Sumit Roy spoke with Rhind to discuss the precious metals market and particularly platinum and palladium, which have been rallying in recent weeks.
HardAssetsInvestor: What do you make of the recent surge in holdings for some of the precious metals ETFs? The iShares Silver Trust made headlines recently with a one-day, 18-million-ounce spike in its holdings; we’ve also seen big gains in platinum and palladium ETF holdings as well. Who is buying, and will it continue?
Rhind: Yes, what we’ve seen from the beginning of this year is better economic data out of China and the U.S. And that’s supportive of the white metals—silver, platinum and palladium. Those are, of course, the industrial metal, so they’ve benefited from that improvement in the economy.
In terms of who are the main buyers—for silver it’s more retail. For platinum and palladium, it’s more institutional. They're more institutional just because they are less understood. They have a lower profile than silver and gold. There are more specialist players in platinum and palladium.
HAI: There has been increasing speculation that the Fed could end its QE programs this year, as the U.S. economy improves. How will that impact the 12-year bull market in gold?
Rhind: Of course, that is all predicated upon that macro view. The Fed and other central banks around the world have embarked on very expansionary monetary policy, and have articulated very clearly to markets that they're going to anchor interest rates at a very low position for many years to come. It would be surprising if there was any change in that, certainly in the short term. Although the economic data have been better here in the U.S., we’re not convinced it lends itself to the point of being able to reverse monetary policy at this stage.
HAI: Anglo American Platinum recently announced huge cuts to its mine production in South Africa. Of course, there's always the threat of strike activity in that country. How strong are the supply-and-demand fundamentals for platinum and palladium right now?
Rhind: Strong. And they have been strong for a while. The only reason prices aren’t even higher in both metals is because of the macro overhang of a depressed global economy. But if you look at the fundamentals of platinum and palladium, you know demand has been strong for both metals. Moreover, we’ve had severe supply issues in platinum, which has spilled over into palladium, given that South Africa accounts for 40 percent of world palladium supply as well. Platinum and palladium have both been disrupted on the supply side, and that’s certainly supportive of fundamentals.
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