Pimco Suggests Investors Give Platinum a Second Look
This article was originally published on ETFTrends.com.
Palladium was the toast of the town in precious metals in 2018 and gold is starting to make a resurgence, but Pacific Investment Management Company (PIMCO) suggests giving platinum a second look.
Platinum prices fell 14 percent last year and is currently priced at just over $800 per ounce compared to gold and palladium, which are both over $1,300 an ounce.
“Platinum is relatively unloved and relatively cheap compared to other precious metals," said Nic Johnson, Pimco’s managing director and portfolio manager for commodities. “It would only take a rotation of a few percent of the assets in gold exchange-traded funds moving to platinum to really have a big impact on platinum supply-demand balances and prices."
Platinum is primarily used in catalytic converters in diesel-powered automobiles, but environmental concerns tamped down demand for the precious metal. As such, the price of platinum has fallen over the years amid weaker demand and excess supply.
Source: tradingeconomics.com
Platinum a Value Proposition
However, with respect to the other precious metals, platinum presents a value proposition for seasoned investors and beginning investors looking to shore up their portfolios with commodities.
“Gold gets top billing when it comes to store of value," said Johnson. “But we think given relative valuations, it makes sense for investors to look at alternatives like silver or platinum."
Investors looking to purchase platinum can take advantage of the low prices and that may not change in the near future. Per LiveMint, "The World Platinum Investment Council estimated in November that supply will outstrip demand by 455,000 ounces in 2019, down from 505,000 ounces in 2018. But it still sees consumption rising about 2 percent, driven by industrial usage and investment flows.
Investors can also take advantage of platinum through exchange-traded funds (ETFs) like the Aberdeen Standard Platinum Shares ETF (PPLT) . The fund is down 4.29 percent in the last three years.
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