Market Overview

Time to Prize Precious Platinum ETFs?


Don't sleep on platinum. The white metal with far more industrial applications than gold currently trades around $1,550 an ounce, or about $100 an ounce below where its yellow rival resides. However, platinum started the year around $1,400 an ounce and that rapid ascent has made it one of the year's best-performing metals, precious or otherwise.

Put another way, the ETFS Physical Platinum Shares (NYSE: PPLT), the lone U.S.-listed ETF backed by physical platinum, has been a better bet in 2012 than the SPDR Gold Shares (NYSE: GLD) has been.

Still, banks are mixed on their forecasts for platinum. Morgan Stanley sees platinum slumping this year before bouncing back in 2013. Standard Bank's 2012 price forecast of $1,525 an ounce for platinum has already been topped, but the bank sees upside to $1,700 next year.

Maybe the banks will be right about platinum. Maybe they'll be wrong, but right now the trend is bullish and it might be time to look at platinum ETFs beyond PPLT.

iPath DJ-UBS Platinum TR Sub-Index ETN (NYSE: PGM) Tracking the Dow Jones-UBS Platinum Total Return Sub-Index, PGM has been a stalwart performer this year, adding almost 12%. Note that PGM does NOT track futures directly. Rather, it tracks a futures-based index. PGM's chart is in decent shape, though a pullback to support at $34 would be advantageous. From there, next resistance would be the 200-day line at $38. Long-term investors can get involved here and play PGM for a return to the $46 area.

UBS E-TRACS Long Platinum TR ETN (NYSE: PTM) PTM tracks an index, which is rebalanced monthly, is comprised of the platinum futures contracts eligible for inclusion in the CMCI with a single target maturity of three months. Well, there must be something to the ETN's strategy because it has outperformed bot PPLT and PGM by wide margins in 2012. Not to mention PTM is far cheaper than both funds on a per share basis. A legitimate move above $21 would put PTM in breakout mode.

First Trust ISE Global Platinum Index Fund (Nasdaq: PLTM) Unbeknownst to some there is a platinum miners ETF and it is the First Trust ISE Global Platinum Index Fund. Actually, PLTM's constituents mine all of the platinum group metals, including platinum, palladium, osmium, iridium, ruthenium and rhodium. Home to 23 stocks and almost $10.8 million in assets under management, PLTM is home to stocks listed all over the globe, but familiar names include Stillwater Mining (NYSE: SWC) and North American Palladium (AMEX: PAL).

Down over 40% in the past year, PLTM has popped almost 12% year-to-date and as long as the ETF can hold support at $18, it's worth a small speculative position in your portfolio with the intent of getting a quick 10% (maybe more).

iShares MSCI South Africa Index Fund (NYSE: EZA) Alright, so perhaps you don't want direct exposure to platinum in terms of futures or miners. Try the iShares MSCI South Africa Index Fund (NYSE: EZA) on for size. South Africa is the world's largest platinum-producing country and materials account for over 24% of EZA's weight so there is enough platinum exposure to give EZA a lift now and then, but not so much that EZA and PPLT move in unison with each other. As nice little bonus, EZA currently yields over 3%. If the ETF gets above $65, it could run back to $75.

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