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Will the US see a platinum ETF?
In his latest research notes, Neal Ryan ponders the creation of a US platinum or palladium ETF.

Author: Neal Ryan
Posted: Friday , 25 May 2007

New Orleans (Blanchard and Co) -

There is some jawboning in the market now from investment houses sponsoring ETFs on European bourses that a US ETF in platinum or palladium will never happen. While such news needs to be taken with a grain of salt because of the desire to promote their own instrument in the Euro bourses, the rationale behind the reasons for a US PGM ETF never being listed are pretty strong.

One of the largest lobbying groups in the US will fight the idea of a PGM ETF tooth and nail - the auto makers. The banking and mining lobby potentially behind the creation of a set of US PGM ETFs don't have the motivation to create the ETFs that the auto makers do to stop them. End of story.

But stranger things have happened. No one expected the GLD ETF to turn into the 11th largest aggregator of gold in the world or that the launch of a silver ETF would ever happen in the US.

Even without the advent of a US PGM ETF, the Euro PGM ETFs are starting to show that while small and slow so far, there is some appetite for investing in the PGM ETFs in Europe.

The key will be seeing this slow, steady trend continuing. If these platinum and palladium ETFs can end up impacting even 3-5% of the demand side of the market, they will significantly influence the price. The US investor, meanwhile, is left having to play the PGM market via physical bullion, futures contracts or a handful of mining stocks.

Neal Ryan is Vice President and Director of Economic Research for Blanchard Economic Research Unit (http://www.blanchardgold.com/)