Platinum and Palladium Fundamentally Undervalued Despite falling 2.5% since the beginning of the year, precious metals are the best performing commodity sub-sector year-to-date. Contrary to our expectations, PGMs (“Platinum Group Metals”) lagged behind, with platinum falling by almost 8% and palladium decreasing by 2.5% over the period. The strong appreciation of the US Dollar against major currencies, particularly against the Euro, did not bode well with commodity prices that tend to be negatively correlated with the US currency. Going forward we expect PGM prices to recover, as sentiment improves and investors return to focus on tighter fundamentals.
The extensive use of platinum and palladium in vehicle catalytic converters makes their demand particularly sensitive to economic, industrial and market conditions at a global level. Fears of a Greek exit from the Eurozone, the biggest consumer of platinum for catalytic converter purposes, coupled with expectations of higher production, prompted an 8% fall in platinum price since the beginning of the year. Palladium also suffered a loss during the period, as a strong US Dollar and negative sentiment towards commodities, weighed on the price of the metal.
South Africa holds the biggest proportion of the world’s platinum and palladium resources, which are mainly located in the Bushveld Igneous Complex. South Africa is well known for the elevated level of worker activism and government intervention in the mining industry, which have substantially affected production in the past, with 2014’s 5-month strike further corroborating this issue. While production of both platinum and palladium is expected to recover in 2015 following a disastrous 2014, social tension could mount up once again in June when wage agreements in South Africa expire.
With supply expected to remain tight, PGM (“Platinum GroupMetals”) markets are expected to remain in deficit in 2015.
However, demand fundamentals are expected to continue to favour palladium over platinum. While persistently low prices are likely to spur Chinese jewellery demand for platinum from the middle of this year, autocatalyst demand from Europe, the biggest diesel market, is likely to underperform its Chinese and US’s peers as the Eurozone continues to be plagued by low growth issues. China, the biggest single contributor to platinum demand, imported 22% less platinum in 2014, as jewellery demand faltered. However, this demand component tends to be particularly sensitive to prices and should therefore recover in 2015. Meanwhile, palladium is expected to benefit from strong auto sales in the US and China, the two biggest markets for gasoline cars. The China Association of Automobile Manufacturers expects auto sales in the country to rise by 8% to 21.3 million vehicles in 2015 while a combination of a large drop in oil prices, increased availability of auto loans and aging automobiles on the road will buoy auto demand in the US.
We expect palladium to continue to outperform platinum. While we believe that platinum price will eventually return to trade above the US$1,300oz level as Chinese demand recovers and Eurozone auto subsidies kick in, palladium appears to be in a better position to benefit from a pick-up in China and US economic growth, the two biggest global auto markets.
Important Information
This communication has been provided by ETF Securities (UK) Limited (”ETFS UK”) which is authorised and regulated by the United Kingdom Financial Conduct Authority (the ”FCA”).
Many investors wonder: If I add Bitcoin to my portfolio, what difference will it make? To answer these questions, we analyzed data to see how even a small Bitcoin allocation can impact your overall investment returns and risk.
It’s Crypto Week. Keep an eye on these bills
This week, the US House of Representatives will host “Crypto Week,” a focused effort to create clearer rules for digital assets. If these new laws pass, they could help investors feel more confident about entering the crypto market. The historic Crypto Week will likely benefit crypto lending projects like Aave, which has recently exceeded $45 billion in total value locked. Take a closer look at what’s on Congress’s agenda and why it matters for the future of crypto.
Turning stocks into tokens? Why it’s cool, but complicated
Crypto keeps evolving, and one clear use case is tokenization, turning real-world assets like property, investment funds, or stocks into digital tokens on the blockchain. Tokenized stocks are grabbing headlines right now as they let you trade company shares anytime, anywhere, making investing easier and faster. But it’s still early days, and there are challenges ahead. Explore how stock tokenization works and what’s holding it back.
Research Newsletter
Each week the 21Shares Research team will publish our data-driven insights into the crypto asset world through this newsletter. Please direct any comments, questions, and words of feedback to research@21shares.com
Disclaimer
The information provided does not constitute a prospectus or other offering material and does not contain or constitute an offer to sell or a solicitation of any offer to buy securities in any jurisdiction. Some of the information published herein may contain forward-looking statements. Readers are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties and that actual results may differ materially from those in the forward-looking statements as a result of various factors. The information contained herein may not be considered as economic, legal, tax or other advice and users are cautioned to base investment decisions or other decisions solely on the content hereof.
Lyxor Smart Overnight Return UCITSETF C-EUR (LYOR ETF) med ISIN LU1190417599, är en aktivt förvaltad börshandlad fond. Denna ETF strävar efter att uppnå kortsiktig avkastning med låg volatilitet genom att investera i en portfölj av finansiella instrument och återköpsavtal.
Den börshandlade fondens TER (total cost ratio) uppgår till 0,10 % p.a. Lyxor Smart Overnight Return UCITSETF C-EUR är den billigaste och största ETF som följer Lyxor Smart Overnight Return-index. ETFen replikerar resultatet för det underliggande indexet syntetiskt med en swap.
Lyxor Smart Overnight Return UCITSETF C-EUR är en mycket stor ETF med tillgångar på 1 565 miljoner GBP under förvaltning. Denna ETF lanserades den 2 mars 2015 och har sin hemvist i Luxemburg.
Investeringsmål
Lyxor Smart Overnight Return – UCITSETF C-EUR är en UCITS-kompatibel börshandlad fond som syftar till att uppnå kortsiktig avkastning högre än Euro Short-Term Rate (€STR) med extremt låg volatilitet. Fonden är aktivt förvaltad och investerar i en diversifierad portfölj av finansiella instrument och återköpsavtal, i en miljö med strikt risk- och likviditetsövervakning. €STR återspeglar grossistkostnaderna för euro utan säkerhet över natten för banker i euroområdet. €STR beräknas och publiceras av ECB.
Det betyder att det går att handla andelar i denna ETF genom de flesta svenska banker och Internetmäklare, till exempel DEGIRO, Nordnet, Aktieinvest och Avanza.
WisdomTree Magnificent 7 3x Daily Leveraged ETPoch WisdomTree Magnificent 7 3x Daily ShortETP erbjuder en trippelhävstångsinvestering i ”Magnificent 7” amerikanska blue-chip-aktier. De syftar till att tredubbla den dagliga utvecklingen för WisdomTree U.S. Bluechip Select Index. Båda ETNerna är fullt säkerställda skuldebrev.
WisdomTree PHLX Semiconductor 3x Daily Leveraged ETPoch WisdomTree PHLX Semiconductor 3x Daily ShortETP ger en trippel daglig hävstångsexponering, lång respektive kort, mot de 30 största börsnoterade företagen i USA som huvudsakligen är involverade i design, distribution, tillverkning och försäljning av halvledare. Båda ETNerna är fullt säkerställda skuldebrev.
Produktutbudet inom Deutsche Börses ETF- och ETP-segment omfattar för närvarande totalt 2 484 ETFer, 202 ETCer och 265 ETNer. Med detta urval och en genomsnittlig månatlig handelsvolym på cirka 25 miljarder euro är Xetra den ledande handelsplatsen för ETFer och ETPer i Europa.