New Precious Metal ETF’s

Posted by Ray on January 8, 2010 under Main | Be the First to Comment

Finally there are Platinum and Palladium ETF’s available for US investors. Starting today, January 8^th, 2010, PALL, the palladium tracking ETF, and PPLT, the platinum tracking ETF, are available to trade. It is no secret that I am a fan of the platinum group metals, especially palladium, and while I did not buy these ETF’s today I do plan on buying them in the future.

One must consider the taxation of owning a commodity based ETF because they are taxed as collectables, 28% on gains versus 15% on equity or bond gains, and whether they want to own physical or paper versions of the metal. I lean towards physical ownership for personal reasons, but the paper version is a good option for retirement accounts that do not want to go through the hassle of setting up physical ownership of owning the metal.

Palladium has been on fire over the past 12 months, up from $180 an ounce to over $420, and platinum is up from about $900 to $1550 or so. Because of these hefty gains you should carefully consider how and when you decide to invest in these metals. I think long-term, 5 years +, you will probably do just fine, but there are no guarantees. I see the beginning of the recovery in the auto industry, as meager as it is in the US, as one of the driving forces in the price recovery of the platinum groups metals, but the applications for green technologies and jewelry, especially in the BRIC economies, should help demand with these metals.