Investors redeemed platinum ETFs in favour of PGM mining company dividends

REDEMPTIONS of platinum-backed exchange traded funds (ETFs) in South Africa totalled 173,000 ounces in the second quarter, according to a report by the World Platinum Investment Council last month.

An undisclosed portion of the funds were shifted into JSE platinum group metal shares, said head of research at the council Trevor Raymond in an interview. “I wouldn’t call it a flight exactly, but earnings for the companies has been exceptional.”

South Africa’s Impala Platinum has announced resource extension projects but they will be slow to implement, said Raymond. “So you’ve got to think that dividends will be paid out,” he added.

The price of platinum gained a third – about $300 per ounce – between January and February and then lost $100/oz to bob just over $1,200/oz until May whereafter it has steadily weakened. At $1,032/oz, the metal is slightly below its January start.

Raymond said there was rapid destocking of metal inventories, mainly by Anglo American Platinum in the second quarter that affected all PGMs with platinum affected the least. “There’s a disconnect between the platinum and palladium price (currently $2,198/oz) that needs to be addressed and I’m not sure why platinum is worth less than gold.

“There’s no reason why platinum shouldn’t move back into a premium to gold.”

One expectation is that expensive palladium autocatalysts will be made from platinum in the future. It’s widely forecast – Sibanye-Stillwater CEO, Neal Froneman feels it is inevitable, but it’s yet to manifest in the metal’s price.

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