Sprott Inc is to launch a new $115 million physically-backed exchange-traded fund (ETF) investing in platinum and palladium.

It will allow retail and institutional investors to gain exposure to metal spot prices without having to collect and store the metals, Reuters reports.

The ETF will be a long-term consideration and will not involve short-term speculation on price fluctuations, according to a preliminary prospectus lodged at the US Securities and Exchange Commission last week.

Differing from traditional ETFs that issue and redeem units daily, the Sprott fund will allow investors to redeem a minimum of 25,000 units on a monthly basis and can redeem the physical metal.

Strong demand from the auto and jewellery markets in recent years has resulted in the price of platinum doubling over a decade.

Similarly, industrial and consumer interest in palladium has caused its value to surge three-fold over the last ten years.

Sprott will issue 11.5 million shares worth $10 each. Reuters notes that this would equate to around 7,666 oz of platinum or 18,200 oz of palladium.

Output in 2010 was 6.05 million ounces of platinum and 7.36 million ounces of palladium

Figures from Johnson Matthey show 10,000 oz of physical palladium and platinum equates to 0.13 per cent and 0.11 per cent of global supply in 2010.

The metal will be held at the Royal Canadian Mint.

Source:

UPDATE 2-Sprott plans physically backed platinum, palladium fund (14/01/12)

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