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Platinum and precious metal ETCs continue to shine, says ETF Securities

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ETF Securities has announced that the assets under management of its exchange-traded commodities have grown by 32 per cent in the past month to more than USD3.3bn, thanks to net inflows of

ETF Securities has announced that the assets under management of its exchange-traded commodities have grown by 32 per cent in the past month to more than USD3.3bn, thanks to net inflows of USD800m.

The firm’s precious metal ETCs have now accumulated more than USD1.5bn of assets, mostly since May last year. In January, precious metal ETC assets increased by USD330m or 28 per cent, with ETFS Physical Platinum and ETFS Physical Gold contributing nearly USD250m of the new assets.

The capital inflows into commodity securities reflected volatile equity and bond markets over the past month, with major equity markets falling by 5 to 10 per cent, prompting a flight to uncorrelated assets such as precious metals. During the period, precious metals have delivered returns of 8 to 16 per cent.

ETFS Physical Platinum gained USD95m in assets over the past week alone and is now the world’s largest platinum ETC with more than USD330m in assets. Including the ETFS Physical PM Basket which has a 21 per cent allocation to platinum, ETF Securities now holds more than 210,000 ounces of physical platinum – equivalent to nearly 5 per cent of annual new mine production.

All physical precious metal ETCs are backed by physical identifiable bars that carry no bank credit risk. The precious metal bars and ingots are held in trust in London by custodian HSBC Bank USA, world’s leading custodian for ETCs with some USD25bn of precious metals held for such products.

Weekly ETC trading volumes have risen to USD450m, up by more than 150 per cent since December, while precious metal ETC trading has increased by 250 per cent from USD80m per week in December to USD280m in the last week of January.

‘There has been a significant increase in demand for ETCs linked to the price of commodities and particularly precious metals,’ says ETF Securities head of listings and research Nik Bienkowski. ‘Most recently, this demand has been for platinum and gold ETCs as investors seek to diversify their portfolios away from equities and bonds into other asset classes.

‘Given the current market uncertainty regarding the banking sector, we have seen strong inflows into physically-backed precious metal ETCs, which have grown 25 per cent in January. In addition, increasing demand and stagnant supply, coupled with the recent power shortages in South Africa, the world’s largest producer of platinum, helped ETFS Physical Platinum to break its assets and trading volume records last week.

‘Overall there has been a huge surge in global demand for ETCs with USD35bn invested over the past three years, of which about 70 per cent – USD25bn – is invested in precious metals.’

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