A platinum ETF is a specific kind of market traded fund that allows investors to make financial plays on the heavy metal known as platinum. Platinum has a vast reputation as a “secondary precious metal” to gold and silver, and a platinum ETF can allow for more liquid trading of this kind of physical resource. Knowing more about these kinds of funds can help investors see how they can cash in on prices changes in platinum and other precious metals.
An exchange traded fund (ETF) is a fund that combines various equities or products into a single financial product that traders can buy and sell over market exchanges. With platinum, which is a commodity, the ETF changes the way that single investors and other parties get involved in trading this raw material. Where traditional commodity trading is done over commodity exchanges and with instruments called futures contracts, ETFs allow for commodities to be traded much like stocks or currencies.
The platinum ETF trades on the popularity of platinum and its uses in global markets. Platinum is used for a lot of jewelry and consumer products, including catalytic converters for vehicles. Enthusiastic traders who like to use platinum ETFs talk about these commodity based ETFs as “exchange based commodity products” where more complex trading on precious metals like platinum can produce sizable yields.
According to experts in the precious metals field, platinum is the most prominent of several “platinum group metals,” or PGMs. Experts note that platinum ETFs can be focused on the whole range of PGMs, or on platinum in particular. Buyers of ETFs have to know specifically what goes into their fund in order to make good trading decisions.
A range of equities and products can fit into a single platinum ETF. Some of these might be directly tied to the price of raw platinum. Others may be the stocks of mining companies, or somehow tied to continued mining operations. All of these different parts of platinum ETFs direct the fund in different ways and create different responses to changes in the markets around metals.
A closer look at platinum ETFs shows new investors how they can get into platinum and other metals easily. Many of these ETF products are traded through online brokerage services with minimal commissions. Instead of buying single stocks, or just purchasing stockpiles of platinum, traders can get a combined approach by participating in complex platinum ETFs and related instruments that some call “derivatives,” which are built to capitalize on a specific price change.