Zurich Cantonal Bank's platinum exchange-traded fund (ETF) has grown by 45 percent since February, the bank said on Tuesday, boosted by concerns over supply from South Africa and a healthy demand outlook.
ZKB now holds a record 62,300 ounces of platinum in its ETF, against 43,000 ounces in February this year, ZKB Asset Management's head of asset allocation and alternative investments Erich Meier told Reuters.
The bank's palladium ETF has grown by 8.5 percent in the same period to 358,000 ounces. In May, it hit a peak of 380,500 ounces.
While in palladium we saw a big jump in investments just after the creation of the fund, and now we have a relatively stable development, in platinum we have had a more steady increase, Meier told Reuters by telephone from Zurich.
Meier said growing demand for catalytic converters in cars and tighter regulation over emissions were driving consumption of the metals.
On the supply side, we are seeing problems with electricity supply in South Africa, which will probably continue for many years to come, he added.
The South African power issues are more likely to affect platinum than palladium, Meier said.
Given more bad news on the South African power situation, we could see higher risk of a spike in platinum than palladium, he said. There are still some palladium stocks around in Russia, though those stocks have decreased.
Platinum prices spiked to an all-time high of $2,290 an ounce in March after news of an electricity shortage in South Africa, source of four out of five ounces of global platinum supply.
State power utility Eskom later said major industrial users should expect to receive only 90 percent of their usual power until as late as 2013, as infrastructure was upgraded.
Meier said he was targeting 30-50 percent growth in both funds in volume terms over the next year as the bank's institutional clients seek a safe haven for their investments.
More and more people are switching out of other products into this one because it is one of the safest products you can have -- they are switching out of structured products with counterparty risk, he said.
The bank does not produce price forecasts for platinum or palladium, he said.
(Reporting by Jan Harvey; editing by Christopher Johnson)
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