Platinum exchange-traded funds (ETFs) saw significant inflows in the second quarter, with holdings having increased by 122 000 oz.
This compares to outflows of 213 000 oz during the first quarter, which mostly occurred in March when some investors sold platinum to raise cash amid a global equity collapse.
The World Platinum Investment Council (WPIC) reports that platinum ETF holdings closed the second quarter at 3.3-million ounces, which is almost as high as the all-time-high closing ETF holding of March 2, which was 3.5-million ounces.
The council says holdings again set new all-time highs in August and September, which reflected a resurgent interest in this undervalued precious metal.
The WPIC explains that a number of factors have influenced investor interest in platinum ETFs, including price. “Since the platinum and gold price lows of March 19, at $599/oz and $1 472/oz, respectively, platinum has outperformed gold in rising 46% compared with gold’s rise of 29%.”
The council adds that investors are seeking access to hard assets in the face of the economic uncertainty brought about by Covid-19 globally.
“At a time of very low interest rates, and in light of the stimulus programmes many authorities have undertaken to support national economies, platinum offers similar safe haven characteristics to gold, providing a hedge against the risk of inflation and currency devaluation.”
The WPIC says the growth in platinum ETF holdings has been especially strong in North America and Europe, reflecting a growing recognition of the platinum investment case and a belief that platinum also offers longer-term value.
Investors are seeing upside in platinum’s demand prospects as substitution of platinum for palladium in autocatalysts continues to gather pace.
Additionally, platinum’s green metal credentials, as the metal that can unlock the hydrogen economy, are beginning to register.
Following the strong performance of platinum ETFs in the third quarter and based on inflows since the end of June, net sales of global platinum ETFs experienced in the first quarter of the year have already been offset by these inflows.
However, the ETF demand forecast for 2020 – prepared by Metals Focus for the WPIC – anticipates current trends to fall off in the final quarter of the year, resulting in net ETF demand of 160 000 oz for the full year.