Palladium and Platinum ETFs Help Push Prices Higher

The following article is from the WSJ from January 19 in part explaining the recent strength in the two precious metals other than the major factor which is that paper oney and the USD especially are slowly dying.

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By Matt Whittaker and Carolyn Cui 
   Of DOW JONES NEWSWIRES 
 

NEW YORK (Dow Jones)--Platinum and palladium futures rose sharply Tuesday, settling at their highest levels since July, boosted by demand from newly launched exchange-traded funds that are luring investors, but could be a headache for consumers of the physical metals.
Benchmark April platinum on the New York Mercantile Exchange rose $43.30, or 2.7%, to settle at $1,639.40 an ounce while most-active March palladium on the exchange gained $14.20, or 3.2%, to $461.95.
ETFS Physical Platinum Shares (PPLT) and ETFS Physical Palladium Shares (PALL) began trading Jan. 8 on the New York Stock Exchange Arca platform and were the first ETFs for the platinum group metals in the U.S. These funds create additional investment demand since physical metal is put into storage to back shares that trade like a stock but track the price of the commodity.
The platinum ETF gained 3% to finish Tuesday's session at $165.12, while the palladium ETF rose 2.6% to $46.94.
The first fund already has accumulated more than 100,000 ounces of platinum, while the second has acquired a similar amount of palladium. The metals are used primarily by the auto industry for production of catalytic converters. The platinum market was about 6 million ounces and showed a small surplus last year. A 100,000-ounce swing is big enough to turn the market to a deficit.
"Everybody is watching what is unfolding with these U.S. ETFs," said Timothy Murray, U.S. general manager of Johnson Matthey, a precious-metals refiner.
On top of higher prices, the volatility of platinum and palladium is hurting consumers such as car makers, LCD glass manufacturers and medical-device makers. Amid sharp daily price movements, some customers have waited and missed opportunities to buy, while others have been forced to buy. "The ETFs are certainly making their lives difficult," Murray said.
Frank McAllister, chief executive of Stillwater Mining Co. (SWC), the biggest palladium producer in the U.S., said that customers recently have been placing their orders for next year because they are worried about prices going even higher. "The ETFs are part of it," he said. Stillwater plans to increase its palladium mine production by 29% to 515,000 ounces this year.
Institutional investors so far have been the strongest buyers of the two new funds, ETF Securities, which operates the new precious metals funds, said Tuesday.
Analysts expect further metal price gains as buying of the physically backed ETFs effectively removes metal from the market. Commerzbank analyst Eugen Weinberg estimates the amount of platinum purchased for the New York-based ETF since its launch was more than double the amount produced by mines during the period.
Strength in the platinum group spilled over into gold and silver.
Gold also benefited from inflation concerns from India and the U.K. and safe-haven buying amid concerns over Greece's sovereign debt. Comex February gold rose $9.50, or 0.8%, to settle at $1,140.00 an ounce.
Silver futures gained on stronger equities, trading on its industrial-metal properties. The metal also gained as a precious metal with gold on safe-haven buying. Comex March silver gained 37.3 cents, or 2%, to settle at $18.80 an ounce.

(Elisabeth Behrmann in Sydney and Devon Maylie in London contributed to this report.)

Settlements (ranges include open-outcry and electronic trading): 
London PM Gold Fix: $1,133.00; previous PM $1,134.50 
Spot gold at 1:31 p.m. ET: $1,139.50, up $5.70; Range: $1,129.35-$1,140.60 
Feb gold $1,140.00, up $9.50; Range $1,127.50-$1,140.70 
Mar silver $18.80, up 37.3 cents; Range $18.400-$18.880 
Apr platinum $1,639.40, up $43.30; Range $1,596.30-$1,647.70 
Mar palladium $461.95, up $14.20; Range $450.90-$466.00 

-By Matt Whittaker, Dow Jones Newswires; 212-416-2139; matt.whittaker@dowjones.com

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Here is the link to the original.