1 November 2022: ETF disinvestment may reflect a change in investor preference to rather own physical platinum: In an ideal world with total asset class flexibility, investors would choose the lowest cost option for exposure to an underlying asset. Since mid-2021, the lowest cost option for platinum exposure has switched first from ETFs to futures, and then from futures to holding physical metal. Indeed, backwardation in the platinum forward curve means investors would effectively be being paid to hold a futures position in platinum, and for some investors the attraction to own and lease out physical platinum may have been even more compelling given significantly elevated platinum lease rates. This may be a factor in the significant disinvestment from platinum ETFs since the middle of 2021, which has totalled 850 koz.
Platinum Perspectives
WPIC® research is free of charge. It can be consumed by asset managers under MiFID II