Tom Lydon (ETF Trends) submits:

Assets: ETF Securities, the provider of ETFS Physical Platinum (PPLT), announced that assets hit $372 million as of Feb. 1.

Objective: To reflect the performance of the price of platinum, minus expenses.

Holdings: PPLT is backed by platinum bullion bars held in both London and Switzerland.

What You Should Know

• PPLT is currently the only U.S.-listed ETF that gives investors physical exposure to platinum
• All physical platinum in the fund is individually identified
• The platinum is inspected biannually by an independent auditor
• Bar numbers, pricing information and net asset value of the trust are available on ETF Securities’ website
• Has a 0.60% expense ratio
• The trustee is Bank of New York Mellon

The Latest News

• Analysts expect both platinum and palladium to have a stellar year in 2010 because of the increase in industrial production. The latest launch of the related ETFs will also put pressure on demand for the metals. [Why Platinum Is the New Gold.]
• The London Bullion Market Association forecasts that platinum prices will range between $900 and $2,578 an ounce this year, with an average of $1,550.

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Mark Anthony submits:

Russia’s Norilsk Nickel Mine (NILSY.PK) is the world’s largest nickel mine, with its by-product, palladium, accounting for 45% of the world’s production.

Recent termination of Russian government palladium stockpile sales, due to depletion of the stockpile, is just one of the reasons why palladium has extremely bullish supply/demand fundamentals, and why palladium performed the best among all four precious metals in 2009.

Reduction of palladium production from the Norilsk Mine could further restrain the supply, and may prompt major industry users to panic hoard as they did in 2000/2001.

One must correctly project Norilsk Nickel’s 2010 metals production, to have an accurate picture of global platinum and palladium supply/demand outlook for 2010.

Norilsk’s Russian operation has two divisions, the Polar Division, which produces platinum and palladium as by-products, and the Kola Division, which handles only nickel and copper.

The Polar Division proven reserve mineral ore contents are as follows:

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Frank Holmes submits:

Platinum lagged other industrial metals in 2009, but an improving global economy and a new investment vehicle may give it a lift this year.

This week, the International Monetary Fund (IMF) said the global recovery is off to a stronger start than expected. The IMF raised its global output expectations to 3.9 percent in 2010.

Since industrial use—mostly automobile manufacturing—makes up about 70 percent of platinum demand, a rise in global output would be expected to stimulate demand growth.

Another reason for optimism is the first exchange-traded fund backed by physical platinum debuted earlier this month. More than 160,000 ounces were accumulated in just its first two weeks.

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Trace Mayer submits:

I like round numbers because they are easier to count. For example, on 14 July 2009 I recommended buying platinum at $1,118 and today it trades at $1,618. I like an unrealized gain of $500 per ounce, or 23.1%, in 6 months. But is platinum overvalued and how can we tell whether we should buy more, hold or sell?

VALUE CALCULATION

Commodities are produced because they add value to society. Wheat is to eat, oil is for fuel, steel is for building and platinum is mainly for catalytic converters in automobiles. Why is gold produced? There are plenty of tons of it in aboveground stockpiles, decades based on annual consumption, so why burrow miles into the earth to bury it in a vault?

The value gold adds to society is in its ability to assist us in performing mental calculations of value. When using gold as the numeraire a much more accurate assessment can be made when allocating capital. The third round of this gold upleg is just starting.

TECHNICAL ANALYSIS

In July 2009 the platinum to gold ratio was below 1.2 and currently it is around 1.41. The extrinsic value of platinum has risen about 17.5%, when priced in FRN$ about 45% and when compared to the earlier upleg in April platinum is looking pretty expensive. But as Professor Jastram explained in The Golden Constant all commodities tend to return to orbit around gold. So where is platinum’s natural orbit?

The natural orbit for platinum is around 1.8 to 2.1 ounces of gold per ounce of platinum. But this is just a cursory technical analysis. To be sure of one’s assertion an analysis of the fundamentals under the Austrian school of economics is also important to undertake.

FUNDAMENTAL ANALYSIS

Platinum is an extremely rare but widely used precious metal. For example, the annual worldwide platinum mining production is valued at about $7.8Bcompared to about 75M ounces of annual gold production or the FDIC’s $0 of reserves and a $500B line of credit with the Treasury to cover $4,831B of insured deposits. In other words, platinum is a lot rarer than gold and gold is a lot rarer than little colored coupons.

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By Frank Tang, Reuters

NEW YORK — ETF Securities Ltd’s first U.S. platinum and palladium exchange-traded funds, set to be launched on Friday, are expected to attract a rush of investment dollars into a highly liquid U.S. market.

ETFS Physical Platinum Shares (PPLT) and ETFS Physical Palladium Shares (PALL) will begin trading on the NYSE Arca platform, where many other ETFs are also listed, NYSE Euronext said on Thursday. Analysts expected the new exchange-traded products to give platinum group metals a shot in the arm and fill some of the void left by lower demand from the beleaguered auto sector.

“Everybody tends to rush into gold when they think of precious metals. Platinum group metals have the added benefit of a high level of industrial input,” said Bill O’Neill, partner at New Jersey-based LOGIC Advisors. “With the growth of car usage in India and China, demand for platinum group metals should be quite buoyant. It’s going to be a metal that attracts a lot more attention in the future.”

Platinum is used mainly in autocatalysts to clean exhaust fumes from vehicles. That accounts for more than 60 percent of total platinum demand. Investment in platinum has been rising even as demand from the auto industry fell for the first time in 10 years. Some traders believe a broad economic recovery is in the making that will stimulate more demand from car makers. On Tuesday, Ford Motor Co. posted a 33 percent sales gain in December as U.S. auto sales ended 2009 on an upswing, after a year when GM and Chrysler went bankrupt and China overtook the United States as the biggest car market.

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Ron Rowland submits:

For the first two new ETFs of 2010, the names pretty much say it all: ETFS Physical Platinum Shares (PPLT) and ETFS Physical Palladium Shares (PALL)). The new funds started trading today (1/8/10) and come from ETF Securities Ltd (ETFS), one of the world’s leading providers of Exchange Traded Products (ETPs). The firm started listing its products in the US last year with the introductions of ETFS Silver Trust (SIVR) in July and ETFS Physical Swiss Gold Shares (SGOL) in September.

PPLT and PALL are the first Platinum Group Metal products to be launched in the US ETF market and offered to US investors. Each Trust will custody all of its physical platinum and palladium in plate and ingot form in a secure London Platinum Palladium Market approved vault which meets “good delivery standards”.

The objective of PPLT is to reflect the performance of the price of Platinum, less the Trust’s expenses. The objective of PALL is to reflect the performance of the price of Palladium, less the Trust’s expenses. Each Trust is open ended and is designed for investors who want a cost-effective and convenient way to invest in these metals as well as diversify their precious metal holdings. Both products have an expense ratio of 0.60% per annum.

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Michael Johnston submits:

After struggling just to survive for much of 2009, the U.S. automotive industry is showing surprising signs of life in early 2010, as surges in foreign demand and better-than-expected domestic results give the struggling sector a boost. While it’s far too early to tell if the turnaround will be sustainable or is simply a blip on the radar, recent developments have investors revisiting a sector that was once left for dead. While this is obviously good news for the “big 3″ (or perhaps more appropriately, the “medium six”), a potential resurgence for carmakers could impact numerous asset classes, as evidenced by platinum’s mini-rally in the first session of 2010.

General Motors announced on Monday that 2009 sales in China rose 67% to a record 1.8 million vehicles, as tax cuts and incentives designed to boost the industry apparently had their intended effect. December sales nearly doubled from the year ago period, totaling nearly 200,000 vehicles in the final month of the year.

As auto sales in the U.S. have plummeted amidst a tightening of consumer budgets, Detroit has begun looking to emerging markets, and China in particular, to pick up the slack. Chinese auto purchases surpassed those in the U.S. for nine of the first 11 months of the year, an event that would have been unimaginable just a few years ago. But the increased percentage of sales derived from China isn’t attributable solely to a drop in U.S. purchases. Figures due out later this week are expected to show that total auto sales in China jumped by 44% in 2009 to 13.5 million units. Even as Chinese consumers purchase automobiles in record numbers the market maintains vast potential: auto ownership rates in China are as low as ten per 1,000 people, compared to more than 750 per thousand in the U.S.

And there’s reason to hope that 2009 won’t be a blip, but the beginning of a sustainable trend. “Despite the sales records in 2009, it looks as if 2010 will be even stronger,” GM China president Kevin Wale said in a statement. “The industry outlook is strong and we expect more growth, albeit on a somewhat slower pace,” GM China president Kevin Wale said in a statement.”

Platinum Prices Surge

Precious metal investing has traditionally focused on gold andsilver, but platinum is becoming an increasingly popular safe haven investment as well. Platinum is one of the world’s rarest metals,with annual global supplies totaling only about 6 million ounces, meaning that prices can be very volatile at times. For a more thorough look at drivers of platinum and palladium prices, see this guide.

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Hard Assets Investor submits:

By Julian Murdoch

Gold has scored a lot of press lately, and for good reason: Its price just keeps on making new records and breaking them. Just last week, the yellow metal recently struck a new all-time high of $1,072/oz.

But on a year-to-date basis, another precious metal has quietly outshone gold’s returns: platinum.

As we’ve discussed before, platinum is both an industrial metal and an investment vehicle, used to make jewelry, construct automobile catalytic converters and as a safe haven for bullion investors. Last year, the white metal was still in hot demand: According to Platinum Today, in 2008, miners across the globe produced 185.7 metric tons of platinum, but consumers used 197.4 metric tons of the white metal—a deficit of 11.7 metric tons.

That deficit was a result of a supply-side shock. Power shortages in South Africa, where the majority of the world’s platinum is mined, caused severe interruptions in mining operations. By early March of 2008, platinum had hit an all-time record of $2,301.50/oz., while gold hovered around $98/oz.

Of course, last October, both metals took a beating as a result of the financial crisis, and their prices had started to converge. Platinum was the harder hit, dropping 68 percent off its record to strike a five-year low of $744.25/oz. on Oct. 27, 2008. Gold fared slightly better, hitting its low of $705 a couple of weeks later.

Since then, both metals have managed to recover from their lows, as investors turn to precious metals for safe havens from the weakening dollar. But platinum in particular has taken off; since the beginning of the year, platinum’s price has gained more than 50 percent, reaching a high of $1,367.90 last Tuesday:

But not all of platinum’s outperformance can be traced back to safe-haven investing. As with most things in the commodity world, China has also influenced platinum’s recovery.

Demand Recovers … But Is It Enough?

In the first half of 2009, demand for platinum jewelry in China went up 81 percent year-over-year. That’s a big deal: According to platinum company Lonmin, China accounts for over 60 percent of the world’s total platinum jewelry demand.

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Ray submits:

I am sure you are familiar with precious metals like gold, silver and platinum, but there is one more metal that gets ignored, palladium. Palladium is a member of the platinum family and is, actually, much more rare than platinum. This metal just might be one of the best options for those looking to invest in precious metals, but it is often ignored.

The metal is ignored because it is viewed as cheap, at $290 an ounce, but it is cheap for a reason: there is no demand right now. That, I believe, is about to change as automakers are looking to save money and make their products cheaper. Palladium’s big brother, platinum, is used in catalytic converters to lower emissions, but at almost $1,300 an ounce it is extremely expensive. However, palladium does the same thing at 25% of the cost and it is rarer than platinum. The fact that there is a very strong possibility that automakers will dump platinum for palladium is reason enough to buy the metal. The last time this happened, palladium went to the moon.

However, the story just gets better because palladium is used for other things too. For some reason palladium can hold up to 9 times its weight in hydrogen which makes it useful for those exploring hydrogen powered cars, but its ability to lower emissions also makes it desirable for those industries looking to go green. For that reason it is a nice green play, for now, while it is cheap. Also, the major suppliers of palladium are Russia and South Africa, with Russia being the primary supplier. As you know, Russia can be hard to deal with so the supply could be cut off at anytime, making the case of ownership of the metal even stronger.

The metal is also used in jewelry, which may not excite you right now, but consider this–China has emerged from the economic slump and platinum is very popular there. As I just said though, platinum is very expensive which makes palladium, which has many of the same characteristics as platinum, attractive for its low cost. So far palladium has performed very well this year coming from a low of $185 to $290 at the moment, it was up yesterday when other metals were down which makes me think Detroit is moving in its direction now.

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By Mark O’Byrne, GoldSeek

The Platinum Group Metal With Very Interesting Fundamentals

Introduction
While gold and it’s very attractive little sister silver have attracted the attention of some investors of late, there is a metal that is far, far rarer and has fundamentals that merit investment consideration.  Some consider it the ultimate symbol of wealth—above and beyond gold, silver or platinum—because of its price and very significant rarity.

The metal in question is rhodium. Rhodium is only an infant compared to the ancient monetary metals of gold and silver. It was discovered along with palladium by British chemist and physicist William Wollaston in 1803. Together with platinum and palladium, rhodium belongs to the platinum group metals (PGM). Besides being a key component in the world automobile industry, some of rhodium’s other principal uses are in glass making and as a finish for mirrors and jewellery, in electrical connections and in aircraft turbine engines.

More recently, rhodium has been used for prestigious honours, or to symbolize wealth, when silver, gold, or platinum are deemed insufficient. Interestingly, the Guinness Book of World Records gave Paul McCartney a rhodium-plated disc for being history’s all-time best selling recording artist and songwriter in 1979.

Price Performance
Rhodium’s price performance has been very volatile in recent years (see chart above and below). Its average price in 2003 was some $530/oz. Supply demand deficits led to a massive move up in price until 2008 when it briefly reached just over $10,000/oz.

Rhodium’s primary use is in catalytic converters in automobiles and with the sharp decline of the global automobile industry, the metal fell very sharply in price. It fell by more than 90% and today rhodium is trading at less than $1,600/oz.

Importantly, the average nominal price of rhodium over the last 40 years is some $1,500/oz which means that rhodium costs today not much more than its average price over the last 40 years (see chart below). And this despite a huge amount of rhodium having been used in industry and consumed during that period.

Supply Demand Fundamentals

Annual world production of rhodium is extremely small. Johnson Matthey estimated that rhodium supply in 2007 was 696,000 troy ounces and fell to 574,000 troy ounces (nearly 22 tonnes) in 2008. CPM, the respected precious metals consulting firm expect rhodium supply to be down 3.1% from last year. In comparison, the world production of gold has been around 2,500 tonnes per annum in recent years. Thus there is only roughly 1/100^th the amount of rhodium produced annually as there is gold (rhodium’s annual production is some 1% of gold’s) and yet the price of rhodium is only some 50% more than gold (some $1,600/oz versus some $940/oz for gold).

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