Edward Sterck Platinum, a precious metal exchange-traded fund (ETF) specializing in platinum, is on track for a record deficit this year. According to research firm ETF Securities, an increasing supply deficit is building up for platinum, driving further price increases. The deficit, the difference between supply and demand, has widened to 491,000 ounces in 2018, the greatest since 2013. With the market’s increasing deficit, the price of the metal is expected to hit $1,050 an ounce in the short-term, according to analysts.
To explain this supply deficit, Edward Sterck Platinum attributed it to platinum’s broad-based industrial demand, citing both strong platinum jewelry sales and its use in catalytic converters for gasoline-powered vehicles. As platinum’s importance in fuel emission systems has become even more valued, industrial demand for platinum has increased. Simultaneously, the mine supply of platinum continues to decline, due to low investment in resources and depreciation of existing mines.
Investors have already started to capitalize on the potential of this precious metal. According to Edward Sterck Platinum, they have seen ETF asset flows increasing steadily since the turn of the year, as investors have looked to platinum’s long-term prospects, adding to its shortage.
The outlook is further encouraging, as the platinum price in January of 2018 was the lowest it had been in 11 years, making it a prime entry point for many investors. Thus, analysts predict that while the supply deficit is expected to persist through 2019, in the long-term, the platinum price should continue to climb. This provides investors with an opportunity to capitalize on the anticipated price increase this and future years.
