Yahoo Finance Fund Flows for Platinum and Palladium May Diverge
Insights into the Platinum and Palladium Markets
The US dollar and precious metals
The sell-off in equities resulted in a sell-off of palladium due to its extensive industrial use. Many analysts expect an increased risk aversion in the second quarter of 2016, which may cause platinum to outperform palladium.
The automotive industry is projected to be robust in 2Q16. This could help both platinum and palladium, which are used as autocatalysts for emissions control.
The slipping US dollar is another crucial factor that could influence platinum and palladium, as it would help dollar-denominated assets. As the dollar slumps, it becomes increasingly cheaper for investors from other countries to buy these dollar-denominated assets. Thus, they may see an increase in demand and, thus, the price.
Exchange-traded funds
The ETFs that closely track the price changes in platinum and palladium include the ETFS Physical Platinum Shares ETF (PPLT) and the ETFS Physical Palladium Shares ETF (PALL). These two funds have lost 1.9% and 11.7%, respectively, on a 30-day trailing basis.
PPLT may continue to have a positive outlook due to the safe-haven bids for platinum. However, PALL may see outflows due to the reduced positive outlook.
PALL versus PPLT
ETF investors sold 2,600 ounces of platinum in 1Q16 after selling 266,000 ounces in 2015. However, money managers bought 291,000 ounces in 1Q16 after selling 454,000 ounces in 2015.
ETF investors sold 94,000 ounces of palladium in 1Q16 after selling 693,000 ounces in 2015. Money managers cut their long exposure by 122,000 ounces in 1Q16 after selling more than 1 million ounces in 2015.
The mining companies that follow the performance of precious metals include Barrick Gold (ABX), Coeur Mining (CDE), and Yamana Gold (AUY). These three shares rose by 47.6%, 45.1%, and 30%, respectively, on a year-to-date basis. The losses in the last few days have reduced most of the miners’ gains.
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