Wednesday May 14, 2008

Platinum ETN drives platinum up sharply upon launch - but still no platinum ETF (yet)

reuters.com :

Platinum ended sharply higher on Friday [9 May 2008] as the launch of U.S. platinum exchange-traded notes boosted sentiment, while gold also finished up on record crude oil prices. Investment bank UBS launched two ETNs offering long and short trading strategies in platinum. ETNs, unlike exchange-traded funds, do not purchase physical platinum to back the number of shares sold.

The two ETNs - UBS E-Tracs Long Platinum ETN (PTM) and UBS E-Tracs Short Platinum ETN (PTD) - started trading on Friday [9 May 2008] on the NYSE Arca platform. Spot platinum rose to a high of $2,095 an ounce, compared with $2,008.50 in New York late on Thursday, but the metal was still more than $200 below a lifetime high of $2,290 an ounce hit on March 4. Platinum's major industrial use is in making autocatalysts, particularly diesel catalysts, as it helps clean environmentally damaging fumes from exhausts. It is also used in jewellery.

- So while we still don't have a platinum ETF yet (akin to the Gold GLD ETF) holding the physical commodity itself, the PTM (PlaTinuM) ETN should be a close enough solution for investors who wish to have a long exposure to the underlying price. At the same time, its evil twin, the PTD (PlaTinum Down) ETN provides a way for people to bet on potential downside price movements.

See also :

1. Platinum price breaks through $2000 for the first time
2. Platinum hits record $1972.75 on South African power outages
3. Gold soars above US$920 as power crisis closes South African mines ($1652 on 25 Jan 2008)
4. Gold, oil rise after Bhutto assassination, platinum hits record ($1542 on 27 Dec 2007)

(2008-05-14 17:53:03 SGT) [Biz] Permalink

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