With gold losing its luster, precious metals exchange traded fund investors can look at platinum as a rapidly growing middle class in China helps sustain demand for the white metal.
Jewelry demand makes up 35% of all platinum consumption, up from 26% in 2008, and Chinese jewelry demand accounts for 25% of overall platinum demand, Mike McGlone, Director of research at ETF Securities, said in a research note.
In the past five years, Chinese platinum jewelry demand has doubled. It now makes up about 80% of global platinum jewelry demand this year.
“As China per capita and disposable incomes rise, so too will its demand for platinum jewelry, pushing up demand in an already constrained market,” McGlone said. “With the platinum price now around 25% below its estimated all-in cost of production, and China demand expected to rise further in 2014, we expect the platinum price to remain well-supported.”
The platinum spot price was hovering around $1,473.2 per ounce Wednesday.
Platinum is also a major component in the auto catalyst sector – auto catalysts help convert toxic byproducts from combustible engines. Europe’s auto catalyst sector is a major consumer, accounting for 16% of total platinum demand. Platinum demand for auto catalysts will likely rise as the Eurozone rebounds off its prolonged recession. [Supply Shortages Could Boost Palladium, Platinum ETFs]
The ETFS Physical Platinum Shares (PPLT) has gained 2.8% over the past month, but the fund is still down 5.7% year-to-date.
ETFS Physical Platinum Shares
For more information on platinum, visit our platinum category.
Max Chen contributed to this article.