In the eyes of many investors, platinum is among the most important precious metals. Even though it is less commonly talked about than gold and silver and is, by all accounts, rather underrated, it still has supporters.
Platinum initially garnered steam on the enhancing industrial consumption of this precious metal. This popularity largely stems from the automobile industry. Specifically, the construction of catalytic converters that help with limiting destructive greenhouse gases from exhaust fumes. Nowadays, the metal is riding high in the market as investors pursue rising markets with the expectation of receiving higher returns.
A lot of investors use platinum as a ‘safe haven’ asset in disconcerting economic times or as a hedge against inflation. Moreover, it is valuable to manufacture various products such as jewelry, cars, electronics, and the aforementioned catalytic converters. Its demand has grown to a point where investing in platinum is an enticing proposition.
For investors looking to gain exposure to the metal, they might buy platinum coins or bars, platinum futures contracts, or platinum mining company shares. Another option comes in the form of a platinum exchange-traded fund (ETF).
For those who want to add platinum exposure to their portfolios, platinum ETFs are ideal tools for quickly and easily accomplishing this. While platinum may not have the clout that gold and silver do, it is still a key aspect of numerous common items. What’s more, it is an important ingredient in various chemical processes. Platinum ETFs are an easy way for curious investors to obtain platinum exposure and are tradeable whenever time markets are open.
A brief overview
Platinum ETFs are instruments that are prone to being comparatively more liquid than holding the physical commodity. There is also a requirement for related storage or insurance cost payments. Like any ETF, it is a product that provides extensive exposure to the industry within a single purchase. When it comes to platinum ETFs, the fund’s underlying holdings may include platinum miners and other companies that usually handle platinum. Other funds will typically physically store platinum.
Investors can choose from two main types of platinum ETFs. The first has a grantor trust structure, meaning that the fund retains physical bullion inside its vaults. This is before administering the purchase, storage, and eventual sale of that bullion on behalf of the owners of the trust. The second structure is an exchange-traded note (ETN), which are products that are described as unsecured debt securities. These will monitor an underlying index and trade on a major exchange in a manner that is akin to a stock. Platinum ETNs’ main purpose is to invest in futures contracts that track the metal’s price rather than physically holding it.
There are three different platinum ETFs that trade in the U.S. Their goal is to track platinum’s price by way of either holding the physical metal or via futures contracts. Moreover, they do not hold any shares of platinum mining companies.
GraniteShares Platinum Trust (PLTM)
PLTM is a relatively new ETF, having been launched on January 22, 2018. It has a grantor trust structure, which is backed by physical platinum that resides in a vault located in London. This vault receives an inspection two times each year. The fund’s objective is to provide an economical method of investing in platinum by tracking the platinum spot market’s price.
Aberdeen Standard Platinum Shares ETF (PPLT)
PPLT is the oldest ETF of the three, having been launched on January 6, 2010. Much like PLTM, it is structured as a grantor trust. Its primary goal is to track platinum’s spot price after subtracting the fund’s expenses. The benchmark of this ETF is the PM London Spot Fix for platinum, and the fund receives backing by physical platinum stored inside a vault located in London.
iPath Series B Bloomberg Platinum Subindex Total Return ETN (PGM)
Like PLTM, PGM is a newer ETF that was launched on January 17, 2018. It is the only fund on this list that has an ETN structure. Instead of being backed by physical platinum, the fund actually invests in futures contracts. Despite this difference, the main objective of the fund remains the same. That is, of course, tracking the spot price of platinum after taking the fund’s expenses into account. Thanks to PGM’s low trading volume, the costs of trading have better chances of being higher in comparison to much more liquid investments.