New research (1) 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.
- 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.”
NTree International Ltd, a specialist in marketing, distribution and investor engagement, is leading the distribution and rollout of the products. NTree has set up a dedicated brand, Metal.Digital https://metal.digital as an education resource for professional investors with a focus on metals.
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.
(1) Global Palladium Fund commissioned the market research company Pureprofile to interview 100 professional investors – 50 institutional investors and 50 wealth managers – across the UK and Germany. The survey was conducted online in January 2021.
Good Delivery Rules’ set by LBMA, LPPM, and LME for precious and base metals are universally acknowledged as the de facto international standard for due to the strict criteria that apply to responsible mining operations and protection of human rights.
LBMA established the Responsible Gold Guidance for Good Delivery Refiners that follows the five-step framework due diligence of the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals.
Global Palladium Fund
The Global Palladium Fund, set up by Norilsk Nickel in 2016, strives to advance the development of world-changing technologies in essential areas such as aerospace, electronics, and the automotive industries to help make the world a better place. In an industry first, GPF is enabling industrial consumers and investors access to a range of metals in a variety of formats, including the ETCs. GPF is proud to be supported by Norilsk Nickel. Its products are in high demand across the globe and it has operations in the Russian Far North, Finland and South Africa.
For more information, visit: www.gpf.global
Norilsk Nickel is the world’s largest producer of palladium, high-grade nickel and a major producer of platinum, copper, precious metals and rare earths.
NTree provides professional investors with an education and distribution service to access commodities and China through active and passive fund solutions including Exchange Traded Products. It will promote the GPF ETCs, providing investor education and insights into the role and importance of the metals as well as their place in portfolios (please visit www.ntree.co.uk for more details)