NEW YORK (Commodity Online): A new wave of exchange traded funds (ETFs) of precious metals is going to hit the US market on Friday. ETF Securities Ltd is launching its platinum and palladium ETFs, tailore-made for the American market today.

Precious metals analysts said the new platinum and palladium ETFs will boost the metals market in the US and other countries.

ETFS Physical Platinum Shares (PPLT) and ETFS Physical Palladium Shares (PALL) will begin trading on the NYSE Arca platform, where many other ETFs are also listed. The new ETFs are expected to give platinum group metals a shot in the arm and fill some of the void left by lower demand from the beleaguered auto sector.

Predicting the future course of bullion and precious metals, ScotiaMocatta, the leading bank and global leader in bullion trade, said investor interest should be sustained by the promising medium-term outlook for platinum and that if PGM ETFs are launched in the US then the amount of metal held in these funds could rise by an order of magnitude.

The market does need to remain aware, however, that these ETFs are highly liquid and that a heavy spell of redemptions could prompt a significant fall in price, the bank said. This possibility is, though, not given a high probability, given the outlook for a recovery in industrial demand and the degree to which industrial users have run down their inventories.

The very high speculative long position on NYMEX is ascribed in part to the possible launch of PGM ETFs in the US.

Noting that silver experienced the same thing twice - once ahead of the delayed launch and then the actual launch of the silver ETF in the US, Scotia suggest that the net long platinum position on NYMEX may well deflate if the ETF is given the nod - and possibly fall even more rapidly if it is refused.

Scotia notes that the accumulation of metal in the palladium ETFs has been steady, with few redemptions and suggests that the structural deficit in the market, sustained but finite stockpile sales from Russia and a good long-term, outlook for the metal should all point to further steady accumulation. Similar arguments apply to palladium as they do to platinum with respect to the net speculative long position on NYMEX, although any sell-off from the speculative position is not expected to generate much of a price pull-back.

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