Second precious metals-backed fund announced

ETF Securities Ltd said it plans to list five new physically backed, precious metal exchange traded commodities (ETCs) on the London Stock Exchange (LSE) next week, making it the second such financial instrument to launch in the last few days.

The Zurich Cantonal Bank (ZKB) announced last week that it would list exchange-traded funds (ETF) for platinum, palladium and silver on the SWX Swiss Exchange by May 10th. Prices of both platinum and palladium rose following the announcement.

ZKB’s platinum ETF was opposed by the world’s biggest platinum producer Anglo Platinum, which said it would not supply physical metal to the fund fearing shortages in the market that could raise prices and negatively impact jewellery demand.

ETF Securities said that investors can trade all four major precious metals platinum, palladium, silver and gold individually, or as a basket comprising all four metals. The securities will list on the main market of the LSE next Tuesday April 24.

Exchange traded commodities are relatively new investment tools which enable investors to gain exposure to commodity prices without trading futures or taking physical delivery.

ETCs are similar to exchange traded funds (ETF) and trade as open-ended securities which can be created or redeemed on demand. Investors can buy and sell them through regulated brokers or approved market makers. However, since the ETCs are backed by physical precious metal, they tend to cause supply shortages in a finely balanced platinum market where the surplus metal is an estimated 20,000 ounces.