New research with institutional investors and wealth managers reveals a positive outlook for global industrial activity in 2021, and this should have a positive impact on demand for precious metals and their valuations.
Timothy Harvey, CEO at NTree
Adoption of green technologies and combating climate change are key factors in demand for precious metals
The study, from Global Palladium Fund (GPF), which has recently listed four physically-backed metal Exchange Traded Commodities (ETCs) – including ones that track the spot price of palladium and platinum – shows that two thirds of investors (67%) predict industrial activity will increase this year. This will drive the price of metals such as silver, palladium and platinum higher according to 69% of professional investors surveyed. Almost a quarter (24%) predict that prices will increase dramatically.
Palladium is a vital component of catalytic converters which turn the most harmful pollutants in car exhaust gas into environmentally friendly compounds like carbon dioxide and water. It also has a range of other applications, including ceramic capacitors, which regulate the flow of electricity in smartphones and laptops.
When considering the key factors influencing the price of palladium, 90% of investors said that growing electric car sales in China will play an important role in pushing the metal’s valuation higher, 89% cited the weak US dollar as a driver of appreciation, and over three quarters (77%) said that continuing shortages of the metal would mean the price continues to rise.
Over two thirds (67%) of investors said that tighter emission standards would also push the price higher. For example, in 2019, China introduced new vehicle emission standards (‘China VI’), which are among the strictest in the world. To comply, all new cars sold in China will have to be equipped with good-quality catalytic converters, and that means as much as 30% more palladium per vehicle.
The study also highlights platinum’s importance in the future hydrogen economy thanks to its unique hydrogen-absorbing properties, and as an essential metal for cleaning toxins from the environment. Given this, plus the United States re-joining the Paris climate accords under President Biden and the growing focus on combating climate change, the majority (95%) of investors agree that industrial demand for Platinum should increase over the coming months and years, and 85% predict that the price of platinum will rise in 2021.
Also, Platinum remains at a very inexpensive level compared to palladium and rhodium. The potential to substitute these metals for platinum could lead to growth in value of the metal – a view that 90% of professional investors interviewed agree with.
Alexander Stoyanov, Chief Executive Officer of GPF said: “Our research shows just how important precious metals are to making the green economy a reality. Their properties mean that they have a fundamental role to play in technologies such as hydrogen fuel cells and other green technologies crucial to changing the world we live in and, as a result, demand for metals such as palladium and platinum will increase.”
Timothy Harvey, Chief Executive Officer and Founder of NTree, said: “Investing in precious and industrial metals has never been timelier as global economies seek to address climate change. That’s why we have launched new metal ETCs that have the lowest charges in the marketplace, enabling investors to access metals cost effectively.”
Global Palladium Fund’s (GPF) new ETCs are listed on the Deutsche Börse and London Stock Exchange and have the lowest charges with total expense ratios (TER) ranging from 0.145% to 0.20%. Targeting Family Offices, wealth managers, institutional and other professional investors, the new physically-backed gold, silver, platinum and palladium ETCs track the spot price of the respective metals they cover.
The ETCs have a strong focus on ESG. LBMA-approved metal will be sourced from producers and suppliers who support the Sustainable Development Goals of the UN 2030 Agenda and other global initiatives in sustainable development and responsible mining.
GPF is also the first to use Blockchain technology to record bar information into Distributed Ledger Technology, thereby providing an extra layer of security and proof of ownership to the Issuer. The use of Blockchain is in addition to the traditional recording processes used by the custodian.