SEC clears way for platinum and palladium ETFs

By Allen Sykora
The Wall Street Journal
Saturday, December 26, 2009

http://online.wsj.com/article/SB1000142405274870471820457461637060750845...

Regulators took another step toward smoothing the way for exchange-traded funds linked to the metals to trade in the U.S.—news that sent platinum and palladium prices to three-week highs on Thursday.

Support for futures prices on Thursday, ahead of Christmas Day, also came from a weaker U.S. dollar that enabled gold and silver to finish higher.

Nearby but lightly traded January platinum futures rose $41.10, or 2.9%, to $1,467.90 an ounce on the New York Mercantile Exchange. The April contract, which has most of the volume, climbed to $1,474 for its highest close since Dec. 3.

Nearby December palladium gained $32.25, or 9.2%, to $387.65 an ounce, while most-active March rose to $389.65, its highest close since Dec. 2.

The Securities and Exchange Commission in the past week approved proposed rule changes from the New York Stock Exchange's NYSE Arca platform for listing and trading of shares of ETFS Platinum Trust and ETFS Palladium Trust. The market construed this as tacit approval, although the SEC hasn't given the final go-ahead and no launch date has been set.

The metals were boosted by anticipation of the increased physical investment demand that the ETFs would create, said Bob Haberkorn, senior market strategist with Lind-Waldock.

As is the case with gold and silver ETFs already trading in the U.S., metal would be put in storage to back the ETF shares, which would trade like a stock but are meant to track the price movement of the commodity, minus the trust's expenses. ETF shares allow investors to participate in precious-metals markets without having to transport, store and insure the physical commodities.

ETFs for gold and silver were launched in recent years have been popular among institutional and individual investors and helped spur gold to exchange-record highs this year. SPDR Gold Shares, the world's largest gold ETF, held nearly 1,132.71 metric tons as of Wednesday. This is more than all but four of the world's central banks and the International Monetary Fund, according data compiled by the World Gold Council.

A trader said the market does not anticipate any roadblocks to the launches.

Platinum-group metals were also supported by expectations that an improving U.S. economy will mean more demand for automobiles, said George Gero, vice president with RBC Capital Markets Global Futures. This supports the PGMs since their main industrial use is for auto catalysts.

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