Gold, Silver, Platinum,
Palladium In One
By TRANG HO,
INVESTOR'S BUSINESS DAILY
Posted 10/25/2010 06:27 PM ET
first ETF to melt gold, silver, platinum and palladium
together flew off the shelves upon its launch on the
New York Stock Exchange Friday.
Physical Precious Metals Basket Shares (GLTR) traded
about 124,000 shares, valued at $9.3 million, on its
share represents the spot price of 0.03 ounce of gold,
1.1 ounce of silver, 0.004 ounce of platinum, and 0.006
ounce of palladium. Fund provider ETF Securities already
provides an ETF tracking each of these metals individually.
It decided how much of each metal to put in the fund
based on liquidity, supply and industrial demand.
— short for glitter — is physically backed by metal
bars stored in vaults in London and Zurich by JPMorgan
Chase. It carries an annual expense ratio of 0.60%.
And Demand Outlook
demand and a falling dollar have rallied precious metals
prices this year. Year to date, gold has climbed 22%,
silver 39%, platinum 16% and palladium 55%, according
to Kitco data.
Hackett, president and CEO of Hackett Financial Advisors,
believes that after such a strong run-up, precious metals
will soon crash. Sentiment indicators show that 95%
of speculators are bullish on gold and only 3% are bullish
on the dollar. When everyone is one side of the trade,
it usually goes the other way.
now we have record short positions on the dollar and
record long positions on commodities, especially precious
metals, just like they were in 2008 before we had a
big break," said Hackett. "Sentiment couldn't
be more skewed."
believes the crowd has piled into commodities on the
expectation that the Federal Reserve will do a second
round of quantitative easing to help lift the economy
at its next meeting in November.
the so-called QE2 won't spark inflation and hammer the
dollar like everyone expects, Hackett says. Instead,
the dollar is going to rally and drive commodity prices
view is that the dollar is going to zero, but just a
modest increase sent gold down $40," Hackett said.
"What if the dollar index rises 10%? The gold market
will completely crash."
think it will be a springboard for heavy profit-taking,"
Hackett said. "Some of the smart money is already
taking money off the table."
also believes China's demand for commodities will fall
as it continues to hike interest rates to cool down
Arbeter, chief technical strategist at Standard &
Poor's, also expects a countertrend rally in the U.S.
dollar index — and drop in precious metals — before
the greenback undercuts last year's low and dives further
projects gold to fall to $1,300 an ounce, down 3% from
Monday's close of $1,339.50 in New York trade; silver
could drop $21-$22 an ounce, or 7%-11%, from Monday's
believe any weakness in metals prices will offer a very
good buying opportunity, as we see much higher prices
as we move into the latter part of 2010 and into 2011,"
wrote Arbeter in his weekly report.
closed at $1,720 an ounce Monday and palladium at $630
an ounce, according to Kitco.
will trade in line with gold and silver. When this huge
inflationary economy actually shows its true colors
you will see a run to $2,500 in platinum and $700 in
palladium, but not until this global economy turns around,"
Terry Sacka, chief strategist at Cornerstone Asset Metals,
wrote in an e-mail.
tax purposes, the IRS will treat GLTR as a "collectible,"
which eats away 28% of long-term capital gains instead
of 15% for most other investments held for more than
28% rate would apply to the investor if the investor
holds the bullion or receipts directly, so from a tax
standpoint it's the same," Roger Lorence, a tax
specialist and partner at New York law firm Sadis &
Goldberg, wrote in an e-mail.
from the sale of shares held less than a year are taxed
as ordinary income.