Investos drop platinum funds

November 10, 2015

London (Nov 10)  Investors cut holdings in exchange-traded funds backed by platinum for a record 13th day, with tumbling prices of the precious metal also driving shares of Lonmin, the third-biggest producer, to an all-time low.

Holdings in the ETFs have dropped 7.6 percent since October 21, according to data compiled by Bloomberg as of Monday, as platinum bumps along around the lowest prices in six years.

“The platinum ETF story is one that reflects a general malaise in the sector, with demand worries and short-term oversupply among the factors worrying investors,” Jonathan Butler, a precious metals strategist at Mitsubishi in London, said by phone. “Fund managers are losing patience with the metals. They don’t think there is going to be a lift in demand.”

The collapse in platinum prices, down about 40 percent since the middle of last year, has become an existential threat to Lonmin, which sank to a record low for a second day on Tuesday. Investors fled the stock, pushing it down 27 percent, after the producer said it would sell billions of shares at a fraction of the market rate to try to restore its finances.

Platinum traded at $912.90 an ounce by 11:15 a.m. in London, according to Bloomberg generic pricing. Gold was at $1,093.55 an ounce, near a three-month low on signs interest rates will head higher in the US Higher rates curb gold’s appeal as the metal doesn’t pay interest or dividends. Gold is down 7.7 percent this year, set for a third annual loss.

There’s a 66 percent probability the U.S. will raise interest rates in December, up from 56 percent on November 11, the day before a strong jobs report, Fed-fund futures data show.

Gold assets in the biggest exchange-traded product backed by the metal fell on Monday to the lowest level in seven years. Holdings in the SPDR Gold Trust slid 0.4 percent to 666.11 metric tons, the least since September 2008, the month Lehman Brothers Holdings Inc. collapsed.

Spot silver slid 0.5 percent, declining for a ninth day, also the longest streak since September 2008, to $14.4977 an ounce and palladium climbed 2.4 percent to $613 an ounce


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