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Aberdeen Standard Physical Palladium Shares ETF

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Wall Street was moderately upbeat last week, with the S&amp;P 500, the Dow Jones and the Russell 2000 adding about 0.6%, 1.5% and 0.8%, respectively, and the Nasdaq Composite remaining flat. The benchmark U.S. treasury yield was 4.25% on Jun 21, 2024 versus 4.20% recorded at the start of the week.

4 Top-Performing ETF Areas of Last Week

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Russia&#39;s invasion of Ukraine and resulting sanctions on Russia are putting pressure on several sectors including commodities. Two precious metals that could be affected by the global crisis are palladium and platinum.

Why Traders Need To Watch Palladium And Platinum Stocks Right Now

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5 Best ETFs Of 2019

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Palladium ETF Continues Pushing Past Precious Metals Rivals

The Other Precious Metals ETF That&#39;s Soaring

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A Precarious State For The South Africa ETF

How The Palladium ETF Can Push Higher In 2019

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The US asked Group of Seven allies to consider sanctions on Russian palladium and titanium, a person familiar with the matter said, as the Biden administration mulls fresh ways to squeeze President Vladimir Putin's war machine.
<a href="https://www.bloomberg.com/news/articles/2024-10-23/us-asks-g-7-to-consider-sanctions-on-russian-palladium-titanium" title="https://www.bloomberg.com/news/articles/2024-10-23/us-asks-g-7-to-consider-sanctions-on-russian-palladium-titanium">https://www.bloomberg.com/news/articles/2024-10-23/us-asks-g-7-to-consider-sanctions-on-russian-palladium-titanium</a>

'US Asks G-7 to Consider Sanctions on Russian Palladium, Titanium' - Bloomberg

Wall Street was moderately upbeat last week, with the S&amp;P 500, the Dow Jones and the Russell 2000 adding about 0.6%, 1.5% and 0.8%, respectively, and the Nasdaq Composite remaining flat. The benchmark U.S. treasury yield was 4.25% on Jun 21, 2024 versus 4.20% recorded at the start of the week.
Last week, in a historic milestone, NVIDIA (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/nvda#NASDAQ">NVDA</a>) rallied further to become the world&#39;s most valuable company, topping Microsoft (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/msft#NASDAQ">MSFT</a>). The artificial intelligence chipmaker topped $3.33 trillion in market value on Jun 18 compared with the software giant&#39;s $3.31 trillion market cap.
However, NVIDIA&#39;s ascent was short-lived and profit booking dragged down the company by the end of the week. NVIDIA was down 2.5% last week.
Meanwhile, U.S. retail sales that released last week were weaker than expected in May. Sales rose just 0.1% sequentially, one-tenth of a percentage point below the Dow Jones estimate. However, the result was slightly better than the downwardly revised 0.2% decline in April. Such soft retail sales boosted the probability of a sooner-than-expected Fed rate cut.
On the housing data front, U.S. homebuilder confidence in the market for newly built single-family homes fell to 43 in June, down two points from May. This marks the lowest reading since December 2023. Sales of existing homes in the United States fell for three successive months in May while prices hit another record.
Against this backdrop, below we highlight a few best-performing ETF areas of last week.
<h3>ETFs in Focus</h3>
iShares MSCI South Africa ETF (ARCA:EZA) &ndash; Up 7.1%
South Africa&#39;s currency and stock market strengthened after Cyril Ramaphosa was sworn as the country&#39;s president for a second term having struck a power-sharing agreement with the opposition Democratic Alliance. This stability offered strength to the Johannesburg Stock Exchange last week, which has otherwise suffered post-election.
Abrdn Physical Palladium Shares ETF (ARCA:PALL) &ndash; Up 6.6%
Palladium prices hit three-week highs last week. Palladium is the key metal to internal combustion cars. Hopes of their renewed popularity probably boosted the price. Plus, expectations around lower interest rates from the Federal Reserve have played its role in driving the metal prices.
abrdn Physical Palladium Shares ETF (ARCA:MSOS) &ndash; Up 5.2%
Like several occasional trading before, cannabis stocks probably rallied last week as the U.S. Department of Justice lately launched a historic proposal to ease restrictions on marijuana. Under the proposal, cannabis would be reclassified from a so-called Schedule I drug (which are considered highly additive with no medical benefits) to a Schedule III (which has moderate to low chances for physical and psychological dependence).
SonicShares Global Shipping ETF (ARCA:BOAT) &ndash; Up 4.9%
Geopolitical tensions in the Red Sea, a crucial area for international trade, have sparked a significant shift in the global shipping industry, drove ocean freight rates higher and offered a bullish case for global shipping stocks.
<a href="https://www.zacks.com/stock/news/2292689/4-top-performing-etf-areas-of-last-week?cid=CS-BENZ-FT-etf_news_and_commentary-2292689">To read this article on Zacks.com click here.</a>

WIIM

Palladium is trading lower amid a rise in the US dollar.

CORN

Fed Chair Powell Highlights Concerns Related To Shortages Of Palladium, Corn

Russia&#39;s invasion of Ukraine and resulting sanctions on Russia are putting pressure on several sectors including commodities. Two precious metals that could be affected by the global crisis are palladium and platinum.
What Happened: The U.S. and other countries are <a href="https://www.benzinga.com/government/22/02/25764301/biden-unveils-first-wave-of-sanctions-against-russia-promising-we-have-our-next-move-prepared">imposing sanctions</a> on Russia, which could impact exports out of the country across varying sectors.
Russia is the largest global producer of <a href="https://www.benzinga.com/money/best-palladium-stocks/">palladium </a>and the No. 2 producer of platinum, two metals that could be impacted by the Eastern European conflict.&nbsp;
Thirty-nine percent of the global refined supply of palladium comes from Russia, according to <a href="https://www.kitco.com/news/2022-02-22/Watch-palladium-gold-and-silver-prices-as-West-sanctions-Russia-in-response-to-Ukraine-crisis.html">Kitco</a>. The country also accounts for around 11% of global platinum supply.
Palladium is used by automotive manufacturers,&nbsp;in electronics and in jewelry. Platinum is the third most-traded precious metal in the world behind gold and silver and is also used for automotive and&nbsp;jewelry applications along with&nbsp;industrial and medical items.
Palladium was up nearly 7% to $2,648&nbsp;per ounce on Thursday. The metal started the year trading around $1,905 and is now up over 30% year-to-date.
Platinum was down more than 1% at $1,094&nbsp;and is up around 15% year-to-date.
Right now, exporters of metals in Russia have not been affected by sanctions, but that could change and the tensions could continue to increase the price of the metals.
The rising price and potential supply issues could hurt the already ailing automotive sector, which&nbsp;has seen supply issues with chips. Companies like General Motors Corp (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/gm#NYSE">GM</a>) and Ford Motor Co (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/f#NYSE">F</a>) are&nbsp;companies that could see price increases or supply constraints.
Palladium <a href="https://www.etftrends.com/palladium-etf-could-rally-in-2022/">hit </a>an all-time high of $3,017 an ounce in May 2021 before falling on production cuts from the auto industry.
Stocks: Many of the precious metals stocks trade over the counter&nbsp;or on international exchanges. The following are a few&nbsp;stocks on major exchanges that offer exposure to palladium and/or platinum.
Platinum Group Metals (AMEX: PLG) is the <a href="https://platinumgroupmetals.net/">operator </a>of the Waterberg Project, which has deposits of metals like palladium and platinum. The company has seen shares rise over the last two trading sessions with shares up 3.97% to $2.10 on Thursday.&nbsp;
Sibanye Stillwater (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/sbsw#NYSE">SBSW</a>) is a <a href="https://www.sibanyestillwater.com/">miner </a>of several minerals and among the largest producers of platinum and palladium in the world. The company reported 144,325 ounces of PGM (platinum group metals-platinum, palladium, rhodium, iridium, osmium and ruthenium) <a href="https://thevault.exchange/?get_group_doc=245/1635420558-ssw-Q32021-operating-update-28Oct2021.pdf">produced </a>in the third quarter in its U.S. division and 500,073 ounces in its South African division. Shares of SBSW were up 2.7% to $17.87&nbsp;on Thursday.&nbsp;
A-Mark Precious Metals Inc (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/amrk#NASDAQ">AMRK</a>) is a precious metals company with operations across gold, silver, copper, platinum, palladium and other metals. A-Mark offers wholesale sales, secured lending and direct-to-consumer operations.
Related Link: <a href="https://www.benzinga.com/government/22/02/25757480/15-stocks-to-watch-during-russia-ukraine-conflict">15 Stocks To watch During Russia, Ukraine Conflict&nbsp;</a>
ETFs: Several mining and metals ETFs&nbsp;offer exposure to palladium and platinum. Here are some investment options for those seeking exposure to the metals.
Aberdeen Standard Physical Palladium Shares ETF&nbsp;(ARCA: PALL) has over $400 million in assets under management and is one of the largest holders of physical palladium. Shares of PALL were up 4.78% on Thursday, closing at $243.53.
Aberdeen also offers a pure-play platinum ETF with the Aberdeen Standard Physical Platinum Shares ETF (ARCA: PLPT). The ETF was launched in 2010 and has over $1.2 billion of assets under management.
The Sprott Physical Platinum &amp; Palladium Trust (ARCA: SPPP) <a href="https://www.sprott.com/investment-strategies/physical-bullion-trusts/platinum-and-palladium/#">invests </a>in physical palladium and platinum and offers exposure to both metals. The ETF was launched in 2012 and gives investors options to redeem their ETF units for physical metals if requirements are met.
The Aberdeen Standard Physical Precious Metals Basket Shares ETF (ARCA: GLTR) is less of a pure-play on the two mentioned metals with exposure to gold, silver, palladium and platinum. The ETF could offer exposure to the two metals most affected by raising political tensions along with two metals that are considered hedges against inflation and market uncertainty.

With just two trading days left in 2019, the SPDR S&amp;P 500 ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/spy#NYSE">SPY</a>), the world&#39;s largest exchange traded fund, is higher by 29.19% this year, meaning the S&amp;P 500 is on pace for its best annual performance since 1997.
Specific to the ETF industry, there are more 2019 superlatives, including the ascent to over $4 trillion in combined assets under management in the U.S. and more than $6 trillion on a global basis.
Roughly 240 exchange traded products, including ETFs and exchange traded notes (ETNs), debuted in the U.S. this year, boosting the domestic ETP population to over 2,400. That&#39;s despite a massive number of closures, and an indicator&nbsp;the industry <a href="https://www.benzinga.com/news/19/12/15026739/the-famous-spy-etf-is-getting-a-low-cost-stablemate">is continuing&nbsp;its maturation process</a>.
With stocks being strong this year, plenty of ETFs offered boffo performances.&nbsp;As our list below indicates, not all of the top performers were equity-based funds.
To build this list, we screened for ETFs up at least 50% in 2019 and <a href="https://www.benzinga.com/node/14992921">stripped out the leveraged products</a>.
The list turned up 75 ETPs that are up at least 50% this year, but when excluding leveraged funds, it dwindles to 17. Without further ado, here are the top five non-leveraged ETFs of 2019.
SPDR S&amp;P Semiconductor ETF (XSD)
As you may have heard, semiconductors were the best-performing industry of the past decade, with the widely followed PHLX Semiconductor Index more than doubling the returns of the S&amp;P 500 over that period. This year, chip stocks have been on fire, with four of the five domestic semiconductor ETFs posting gains in excess of 60%.
The battle for top honors about chip ETFs is coming down to the wire, as the SPDR S&amp;P Semiconductor ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/xsd#NYSE">XSD</a>) is up 65.8%, a modest advantage over the 65.4% returned by the VanEck Vectors Semiconductor ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/smh#NYSE">SMH</a>).
Give XSD some credit. Often overlooked in the chip ETF discussion, the $513-million fund equally weights its components, so its&#39; dominated by this year&#39;s stars such as Advanced Micro Devices, Inc.&nbsp;(NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/amd#NASDAQ">AMD</a>) and NVIDIA Corporation&nbsp;(NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/nvda#NASDAQ">NVDA</a>).
Aberdeen Standard Physical Palladium Shares ETF (PALL)
Up 51.05% year-to-date, the Aberdeen Standard Physical Palladium Shares ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/pall#NYSE">PALL</a>) isn&#39;t among the top five ETFs overall simply because it&#39;s not a semiconductor or clean energy fund &mdash; but it is this year&#39;s best-performing, non-leveraged commodities fund.
The white metal recently topped $2,000 per ounce, making it more valuable than gold, but some volatility has crept into PALL and it declined last week.&nbsp;No ETF, commodities or otherwise, moves up in a straight line.
&ldquo;Palladium has surged to unprecedented levels in 2019 as tighter emissions rules spurred demand, while supply hasn&rsquo;t yet been able to respond. Citigroup Inc. forecasts the move upward now has the <a href="https://www.bloomberg.com/news/terminal/Q2ABPXDWRGGA">potentia</a>l to see prices gain to $2,500 in the first half of next year. Power outages in major producer South Africa hurt mine operations this month, fueling gains,&rdquo; <a href="https://www.bloomberg.com//news/articles/2019-12-17/palladium-smashes-through-2-000-to-record-as-rally-gathers-pace?srnd=markets-vp">according to Bloomberg</a>.
Virtus LifeSci Biotech Clinical Trials ETF (BBC)
In what has, until recently, been a rough year for the health care sector, the Virtus LifeSci Biotech Clinical Trials ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/bbc#NYSE">BBC</a>) has <a href="https://www.benzinga.com/general/biotech/19/12/14951009/theres-a-really-good-chance-you-missed-one-of-the-years-best-etfs">been a consistent standout</a>. Up more than 66% this year, BBC is easily the star among non-leveraged health care ETFs in 2019.
BBC&#39;s holdings are primarily companies with drugs in early stage trials, so the fund&#39;s success is usually levered to Food and Drug Administration&nbsp;approvals. With many of the fund&#39;s components being small-cap names, the possibility exists for larger pharmaceuticals and biotechnology companies to acquire a BBC holding.
Those catalysts could be at play again in 2020, as could a return to leadership by small caps that would benefit BBC.
Invesco Solar ETF (TAN)
Over the past three years, the Invesco Solar ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/tan#NYSE">TAN</a>) is higher by 89.4%, defying the logic that solar stocks need a Democrat in the White House to thrive.
That run includes a gain of almost 67% this year, which is easily enough to earn the oldest and largest solar ETF a place on this list.
TAN tracks the MAC Global Solar Energy Index. The&nbsp;benchmark &ldquo;is comprised of companies in the solar energy industry. The index is computed using the net return, which withholds applicable taxes for non-resident investors,&rdquo; <a href="https://www.invesco.com/portal/site/us/financial-professional/etfs/product-detail?productId=TAN">according to Invesco</a>.
The combination of easing trade tensions between the U.S. and China, TAN&#39;s two largest geographic weights; declining renewable costs and increased corporate adoption position TAN for more upside in 2020, though it may not replicate 2019&#39;s showing.
U.S. Global GO GOLD and Precious Metal Miners ETF (GOAU)
Not only does the U.S. Global GO GOLD and Precious Metal Miners ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/goau#NYSE">GOAU</a>) lay claim to being one of this year&#39;s best non-leveraged ETFs, it&#39;s making a strong case to earn more attention in the gold miner&nbsp;ETF conversation.
GOAU&#39;s 2019 gain of 50.66% has been boosted by a recently torrid pace, as the fund tacked on more than 9% this month as gold&nbsp;rallied alongside stocks.
This&nbsp;fund&#39;s success can be attributed to active management that focuses&nbsp;on gold mining and production or companies with royalty models.
Royalty companies have lower expenses, less volatility and more predictable revenue streams. Past performance isn&#39;t a guarantee of future returns, but over its two-and-a-half years on the market, GOAU has outperformed the two largest gold miner&nbsp;ETFs.
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Lower interest rates and negative-yielding debt around the world are among the factors contributing to investors renewed interest in precious metals and the related exchange traded funds this year.
When the conversation on precious metals ETF is reborn, it usually drifts toward funds such as the SPDR Gold Shares (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/gld#NYSE">GLD</a>) and the iShares Silver Trust (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/slv#NYSE">SLV</a>) due to silver&#39;s correlations to gold.
This year, however, the precious metals competition, both spot prices and ETF performances, is being dominated by palladium and it&#39;s not even close.
<h3>Why It&#39;s Important </h3>
Year to date, the Aberdeen Standard Physical Palladium Shares ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/pall#NYSE">PALL</a>), which is backed by physical holdings of the white metal, is higher by more than 43%. In a vacuum, that&#39;s a stellar performance, but consider the following: The year-to-date performances of GLD, SLV and PALL&#39;s stablemate, the Aberdeen Standard Physical Platinum Shares ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/pplt#NYSE">PPLT</a>), need to be combined to exceed PALL&#39;s 2019 returns.
To be fair, PALL is the most volatile of that quartet of precious metals ETFs, but the palladium fund is topping its rivals by wide enough margins that the extra volatility is worth it.
Additionally, a supply shortage coupled with strong demand has made palladium the most expensive precious metal, ahead of gold and even platinum.
&ldquo;Usage is increasing as governments, especially China&#39;s, tighten regulations to crack down on pollution from vehicles, forcing automakers to increase the amount of precious metal they use,&rdquo; <a href="https://www.bloomberg.com/news/articles/2019-10-28/why-palladium-is-suddenly-a-more-precious-metal-quicktake-k2ap4ryc?srnd=premium">according to Bloomberg</a>. &ldquo;In Europe, consumers bought fewer diesel cars, which mostly use platinum, and instead chose gasoline-powered vehicles, which use palladium, following revelations that makers of diesel cars cheated on emissions tests.&rdquo;
<h3>What&#39;s Next</h3>
As for what&#39;s next for PALL, perhaps it&#39;ll be inflows from late-arriving investors because even with the fund&#39;s stellar performance this year, it&#39;s trailing GLD, PPLT and SLV in terms of year-to-date inflows.
Investors have added a respectable $29.22 million to PALL this year, but that pales in comparison to the $986.23 allocated to SLV and the $6.32 billion that&#39;s flowed into GLD.
Assuming PALL finishes 2019 outperforming its aforementioned rivals, something that&#39;s likely to happen, this market the sixth year in the past seven PALL has been the top performer among the aforementioned precious metals funds.
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Photo by Jurii/Wikimedia.

As is usually the case when discussing precious metals, gold and the related exchange traded funds are dominating the conversation this year. The SPDR Gold Shares (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/gld#NYSE">GLD</a>), the world&#39;s largest gold-backed ETF, is up 10.38% year to date and resides just below its recently set 52-week high.
<h3>What Happened</h3>
While gold and the related ETFs are deserving of the accolades, the real winners in the precious metals space this year are palladium and the Aberdeen Standard Physical Palladium Shares ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/pall#NYSE">PALL</a>).
PALL, the largest U.S.-listed palladium ETF, is up more than 26% this year, or more than double the gains offered by rival gold funds.
<h3>Why It&#39;s Important</h3>
&ldquo;But gold has not been the shiniest precious metal this year; back in January, palladium became the most expensive precious metal for the first time since 2002, and by July 8, 2019, it had reached USD 1,542 per troy ounce, a premium of almost USD 150 to gold,&rdquo; <a href="https://www.indexologyblog.com/2019/07/10/palladium-all-that-glitters-is-not-gold/">said S&amp;P Dow Jones Indices in a recent research note</a>.
Palladium&#39;s dominance is important for other reasons, including the fact that is not usually viewed as safe-haven asset as is the case with gold. Rather, palladium is one of the more volatile metals, due in large part to the global automobile industry being one of the metal&#39;s primary sources of demand.
&ldquo;Approximately 80% of palladium demand comes from the automotive industry,&rdquo; said S&amp;P Dow Jones. &ldquo;Its other uses include electronics, dentistry, and jewelry. As regulations on emissions have tightened, demand for palladium to be used in the catalytic converters of gasoline-powered vehicles has risen.&rdquo;
<h3>What&#39;s Next</h3>
While automobile demand is integral to the palladium demand equation, investors considering PALL should also examine the production situations in Russia and South Africa, the dominant players in the global palladium market.
&ldquo;Palladium prices spiked in March 2019 when Russia&rsquo;s Ministry of Industry and Trade announced it was considering a temporary ban on the export of precious metal scrap and tailings, while in South Africa, the world&rsquo;s largest platinum miners are about to embark on a series of wage negotiations with unions, which in the past have led to lengthy mine strikes,&rdquo; according to S&amp;P Dow Jones.
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Photo by Jurii/Wikimedia.

The Other Precious Metals ETF That's Soaring

The iShares MSCI South Africa ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/eza#NYSE">EZA</a>), the largest exchange traded fund dedicated to stocks in Africa&#39;s largest economy, is up about 6 percent this year.
On the surface, that sounds pretty good, but upon further examination, EZA looks weak and vulnerable to some downside.
<h3>What Happened</h3>
To be precise, EZA is up 6.05 percent year to date, but the South Africa ETF is trailing the MSCI Emerging Markets Index, of which South Africa is 5.95 percent, by more than 300 basis points. That statistic underscores the disappointing nature of South African stocks in 2019, but there&#39;s more.
South Africa is the world&#39;s largest producer of platinum and the second-largest palladium-producing country. EZA is slightly outperforming the largest U.S.-listed platinum-backed ETF, but the Aberdeen Standard Physical Palladium Shares (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/pall#NYSE">PALL</a>) is up 20.27 percent year-to-date, making the fund one of this year&#39;s best-performing commodities ETFs.
<h3>Why It&#39;s Important</h3>
&ldquo;The February 2018 installation of a new president, Cyril Ramaphosa, has rekindled hopes of an economic renaissance, but the country still faces serious challenges,&rdquo; <a href="https://insight.factset.com/south-africas-economy-snaps-out-of-recession-but-is-it-out-of-the-woods">said FacSet in a recent note.</a> &ldquo;After seeing two consecutive quarters of economic contraction in the first half of 2018, significant economic uncertainty remains.&rdquo;
While the regime change was initially cheered by investors, South Africa&#39;s economy still faces significant hurdles. Those hurdles can be seen as roadblocks for investors considering EZA because has to handily outperform the MSCI Emerging Markets Index by wide margins to turn its risk-reward proposition favorable.
Over the past 36 months, the MSCI Emerging Markets Index outperformed EZA by 2,100 basis points while being 1,300 basis points less volatile than the South Africa ETF.
<h3>What&#39;s Next</h3>
Last month, &ldquo;finance minister Tito Mboweni painted a bleak picture as he outlined the state of South Africa&rsquo;s finances for 2019,&rdquo; according to FactSet. &ldquo;While the National Treasury predicts accelerating real GDP growth rate over the next three years (1.5% in 2019, 1.7% in 2020, and 2.1% in 2021), both the current account deficit and gross debt are expected to swell. Gross government debt, which has been rising steadily since 2009, surpassed 55% of GDP at the end of 2018. The latest government forecasts have debt topping 60% of GDP by 2024.&rdquo;
If the U.S. dollar regains momentum, EZA would likely be sapped due to the commodities-intensive nature of South Africa&#39;s economy.
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The strong U.S. dollar is hindering an array of commodities and related exchange traded funds&nbsp;this year. 
Palladium and the Aberdeen Standard Physical Palladium Shares ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/pall#NYSE">PALL</a>) did not get that memo.
On Thursday, PALL climbed 1.27 percent, extending its year-to-date gain to 17.68 percent, easily making the palladium fund one of this year&#39;s best-performing commodities ETFs.
<h3>What To Know</h3>
Up nearly 18 percent in the fourth quarter, PALL resides just 4.09 percent below its recently set 52-week high. Palladium&#39;s recent surge had the white metal trading at prices higher than gold earlier this month, marking the first time since 2002 that palladium prices topped gold.
&ldquo;Palladium&rsquo;s gains this year have overshadowed platinum as well, having overtaken its better-known sister metal last year,&rdquo; <a href="https://www.reuters.com/article/us-palladium-gold-price/palladium-outshines-gold-for-first-time-in-16-years-idUSKBN1O423Y">according to Reuters</a>.
<h3>Why It&#39;s Important</h3>
While PALL recently backed off the record highs seen earlier this month, the fund&#39;s late-year price action is important because it could be a sign of more upside to come in 2019. The fundamental case for PALL and palladium is bolstered by expectations that palladium demand will once again outstrip supply.
&ldquo;Shortages of palladium sent prices of the commodity used in autocatalysts to a record this year, at times surging past gold to become the most precious of major metals,&rdquo; <a href="https://www.bloomberg.com//news/articles/2018-12-27/year-s-best-major-metal-gains-steam-as-supply-eclipses-trade-woe?srnd=markets-vp">according to Bloomberg</a>. &ldquo;Citigroup Inc. sees no supply relief soon. Users are borrowing the metal to meet their immediate needs, sending the one-month lease rate to an all-time high of 34.5 percent.&rdquo;
Russia and South Africa are the world&#39;s top two palladium-producing countries. Some analysts expect the supply deficit for the metal to last through the end of 2020.
<h3>What&#39;s Next</h3>
Palladium is widely used to manufacturer catalytic converters for automobiles made in major markets, such as China, the U.S. and Japan. The metal, unlike rival platinum, is also used in the production of hybrid vehicles, potentially opening a long-term demand thesis for PALL.
&ldquo;This has helped the metal largely ignore falling car sales across the globe, especially in China, the world&rsquo;s largest auto market, where sales marked a fourth straight month of declines,&rdquo; according to Reuters.
Year-to-date, investors have pulled nearly $73 million from PALL, but the ETF has seen fourth-quarter inflows of almost $18 million.
Related Links:
<a href="https://www.benzinga.com/trading-ideas/long-ideas/18/12/12901419/5-best-etfs-of-2018">This Year&#39;s Best ETFs</a>
<a href="https://www.benzinga.com/trading-ideas/long-ideas/18/12/12901203/bringing-some-sexy-to-consumer-staples-etfs">Adventure In A Boring Sector</a>
Photo by Jurii/Wikimedia.&nbsp;

How The Palladium ETF Can Push Higher Next Year

Even with the benefit of Wednesday&#39;s rally, the S&amp;P 500 is still down about 8 percent this year. With just three trading days left in 2018, the S&amp;P 500 will need a couple of sequels to Wednesday if the benchmark U.S. equity gauge is to close the year in the green.
Of course, equity market struggles are hampering a broad swath of the U.S. universe of exchange traded funds. As of Dec. 26, just 69 U.S.-listed ETFs sported&nbsp;year-to-date gains of at least 10 percent and a significant portion of that group are leveraged funds, <a href="https://www.benzinga.com/trading-ideas/long-ideas/18/12/12897346/flight-to-safety-lifts-this-leveraged-etf">which aren&#39;t designed</a> to be buy-and-hold instruments.
Still, some traditional, pure beta ETFs are shining bright in 2018. Here are five of this year&#39;s best.
iShares U.S. Medical Devices ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/ihi#NYSE">IHI</a>)
Year-To-Date Gain: 11.27 percent
The health care sector, the second-largest sector weight in the S&amp;P 500, is clinging to its status as 2018&#39;s best-performing sector and the iShares U.S. Medical Devices ETF is one of the leading ETFs in this group. Following a Wednesday gain of more than 5 percent, IHI is up more than 11 percent year-to-date. IHI, which tracks the Dow Jones U.S. Select Medical Equipment Index, is the largest medical devices ETF.
IHI is led by Abbott Laboratories (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/abt#NYSE">ABT</a>) and Medtronic Plc (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/mdt#NYSE">MDT</a>) and the fund is closing in on its fourth consecutive year of outperforming the S&amp;P 500 Health Care Index.
<a href="https://www.benzinga.com/news/18/12/12901723/5-worst-etfs-of-2018">Click here to read about the worst ETFs of the year.</a>
Invesco Dynamic Software ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/psj#NYSE">PSJ</a>)
YTD Gain: 13.73 percent
As has been widely documented, technology stocks have been among the worst offenders during the recent market swoon. Fortunately for the Invesco Dynamic Software ETF, the fund built up impressive gains earlier this year and never turned negative on a year-to-date basis during the fourth-quarter broader market slide.
Wednesday&#39;s 5.72 percent gain on almost quadruple the average daily volume helped PSJ, at least for one day, inch out of a bear market, but the fund is still 19 percent below its 52-week high.
PSJ components are evaluated on price momentum, earnings momentum, quality, management action, and value, <a href="https://www.invesco.com/portal/site/us/financial-professional/etfs/product-detail?productId=PSJ">according to Invesco</a>.
Aberdeen Standard Physical Palladium Shares ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/pall#NYSE">PALL</a>)
YTD Gain: 16.2 percent
Despite the dollar being strong this year, a scenario hampering scores of commodities ETFs, the Aberdeen Standard Physical Palladium Shares ETF recently surged to record highs. The metal&#39;s recent surge has its prices flirting with those of gold, which is noteworthy because palladium usually trades at steep discounts to bullion.
Palladium&#39;s 2018 rally is the quintessential bullish commodities story: supply is not keeping up with demand.
&ldquo;Usage is increasing as governments, especially China&rsquo;s, tighten regulations to crack down on pollution from vehicles, forcing carmakers to increase the amount of precious metal they use,&rdquo; <a href="https://www.washingtonpost.com/business/why-palladiums-suddenly-an-especially-precious-metal/2018/12/20/3c08e27e-04b6-11e9-958c-0a601226ff6b_story.html">according to Bloomberg</a>. &ldquo;In Europe, consumers bought fewer diesel vehicles, which mostly use platinum, and instead chose gasoline-powered vehicles, which use palladium, following revelations that makers of diesel cars cheated on emissions tests.&rdquo;
iShares MSCI Qatar ETF (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/qat#NASDAQ">QAT</a>)
YTD Gain: 16.36 percent
In a year of struggles for emerging markets stocks and ETFs, the iShares MSCI Qatar ETF really stands out. The only ETF dedicated to stocks in Qatar is up more than 16 percent while the MSCI Emerging Markets Index is saddled with a year-to-date loss.
As a member of the Organization of Petroleum Exporting Countries, Qatar should be vulnerable to oil declines, but QAT is proving otherwise this year. Qatar is leaving OPEC next year to focus on natural gas production and exports.
United States Natural Gas Fund (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/ung#NYSE">UNG</a>)
YTD Gain: 21.05 percent
Speaking of natural gas, the United States Natural Gas Fund is one of this year&#39;s best-performing non-leveraged ETFs, but most of those gains were accrued in November and a significant portion of those gains have been given back this month. Underscoring the volatile nature of trading natural gas, even with an ETF, UNG is up 21.05 percent this year but down more than<a href="https://finviz.com/quote.ashx?t=UNG&amp;ty=c&amp;ta=1&amp;p=d"> 22 percent in December</a>.

The U.S. dollar is one of this year&#39;s most disappointing developed market currencies, but that is not helping the commodities complex. Most commodities, an asset class denominated in dollars, are sagging, but some precious metals have been notable exceptions.
Among exchange-traded products, the ETFS Gold Trust (NYSE: <a class="ticker" href="/stock/sgol#NYSE">SGOL</a>) is up 9.4 percent year to date while the ETFS Physical Palladium Shares (NYSE: <a class="ticker" href="/stock/pall#NYSE">PALL</a>) is up a stunning 26.9 percent. Sturdy precious metals prices are helping the ETFS Precious Metals Baskets Trust (NYSE: <a class="ticker" href="/stock/gltr#NYSE">GLTR</a>) to a year-to-date gain of more than 8 percent.
<h3>All That Glitters ...</h3>
GLTR holds a basket of physical gold, silver, palladium and platinum.
&ldquo;Given this action in Precious Metals amid the FOMC rate backdrop, we are also looking at diversified &#39;Precious Metal&#39; ETPs that generally appeal to those investors and portfolio managers whom prefer &#39;basket&#39; exposure to the space as opposed to betting on specifically Gold or Silver for example,&rdquo; said <a href="http://streetonefinancial.com/">Street One Financial</a> Vice President Paul Weisbruch in a note out Wednesday.
<h3>Pondering Palladium</h3>
Although gold and silver loom large in GLTR, palladium, until this week, has been helping the ETF surge.
&ldquo;The background for palladium is for good industrial demand and likely a significant market deficit this year, and on top of course you&rsquo;ve got this speculative squeeze,&rdquo; Mitsubishi analyst Jonathan Butler said, <a href="http://www.reuters.com/article/us-global-precious-idUSKBN1902H0">reported Reuters</a>.
Palladium supply is expected to be in a deficit again this year, which could help deliver more upside for PALL and GLTR.
&ldquo;Traders reported a reluctance to lend the metal, suggesting tightness in near-term supply. Chart patterns indicate that the metal is vulnerable to a sell-off from these elevated levels, however, technical analysts said,&rdquo; according to Reuters.
<h3>Macro Trends, Influences</h3>
While precious metals retreated Wednesday after the Federal Reserve boosted interest rates, inflation could portend more benefits for gold and friends.
As <a href="https://www.benzinga.com/trading-ideas/long-ideas/17/05/9417254/a-surprise-friend-for-gold-etfs">Benzinga reported earlier this year</a>, &ldquo;Data suggests inflation is rising, which could bode well for gold ETFs because the yellow metal is often embraced as an inflation hedge. Accounting for inflation, real U.S. interest rates are in negative territory, further increasing the potential for out-performance by gold relative to other safe-haven assets.&rdquo;
Related Links:
<a href="https://www.benzinga.com/news/17/06/9609279/fed-hikes-rates-without-disrupting-the-market-classic-yellen">Fed Hikes Rates Without Disrupting The Market: 'Classic Yellen'</a>
<a href="https://www.benzinga.com/general/education/17/06/9608611/is-bitcoin-the-new-gold-still-too-early-to-say">Is Bitcoin The New Gold? Still Too Early To Say</a>

Most metals are advancing ahead of the U.S. presidential election irrespective of their risk disposition. However, the trend in recent sessions is reminiscent of a see-saw amid conflicting signals concerning the election results.
On October 28, the markets were jolted by the <a href="http://www.nytimes.com/2016/10/29/us/politics/fbi-hillary-clinton-email.html">FBI re-opening investigations </a>into Hillary Clinton e-mail scandal after e-mails sent from the Democratic candidate were found in the computer of one of Clinton aide Huma Abedin's estranged husband. However, Clinton's name was cleared yet again last Sunday and promptly markets headed higher on the catalyst.
<h3>Gold Begins To Glitter After Monday's Loss Of Luster</h3>

Safe haven <a href="http://www.benzinga.com/trading-ideas/long-ideas/16/08/8288683/considerations-when-mulling-gold-etfs">gold </a>is advancing, with the most actively traded December futures gaining $3.40 currently to $1,282.80 <a href="http://www.investopedia.com/terms/t/troyounce.asp">a troy ounce.</a> The yellow metal typically outperforms when risk aversion rules the roost and is also inversely correlated with the dollar, given that it is denominated in the dollar.
However, Tuesday's gain has come after a 1.95 percent slump on Monday, the biggest single-day percentage drop in five weeks, as prospects of a Clinton-victory brightened following the FBI clearing her in the e-mail scandal. Despite Monday's setback, gold has been on a roll in recent weeks, thanks to its safe haven appeal, and has recorded gains for the fourth straight week in the week ended November 4.
<h3>All That Glitters Is Not Gold ... Silver, Platinum And Palladium Shine, Too</h3>
Among the other precious metals, silver, platinum and palladium futures are all higher. December silver is up $0.194 at $18.345 an ounce after slipping 1.2 percent on Monday, which however came after a 3.2 percent gain in the week ended November 4. After a $3.10 retreat on Monday, platinum futures for January delivery are tacking on $9.40 to $1,010.80 an ounce.
Palladium futures, which bucked the downtrend on Monday by rallying $31.60 to $656.40 an ounce, are gaining $4 to $660.40 an ounce.
<h3>China Boost For Copper</h3>
Among base metals, copper futures for December delivery are adding $0.0295 to $2.3390 a pound. Copper has been having an extended pre-election run up, having gained 2 percent on Monday to $2.3095, marking the eleventh straight session of gain. Copper is riding the China momentum, as the commodity-hungry country is showing signs of renewed vigor amid policy actions.
<h3>Oil Plagued By OPEC's Resolve</h3>

At the same time, oil is bleeding, with a barrel of oil currently fetching $44.48, down $0.41 from the previous session's close of $44.89 a barrel. On Monday, the black gold added $0.82 to $44.89 a barrel, as the Clinton news, OPEC's reiteration of its resolve to implement production cuts and an earthquake that hit the Cushing, Oklahoma, storage hub proved bullish for oil.
<h3>A Look At How Metal Stocks/ETFs Fared Amid Metals' Gyrations</h3>
<ul>
<li>Avino Silver and Gold Mines Ltd (NYSE: <a class="ticker" href="/stock/asm#NYSE">ASM</a>) is currently up 0.86 percent at $2.34 after soaring roughly 20 percent since the re-opening of the Clinton e-mail case. Gold's rally on its safe haven status has buoyed the stock.</li>
<li>Direxion Shares Exchange Traded Fund Trust (NYSE: <a class="ticker" href="/stock/dust#NYSE">DUST</a>) is down 2.73 percent at $38.42.</li>
<li>Direxion Shares Exchange Traded Fund Trust (NYSE: <a class="ticker" href="/stock/nugt#NYSE">NUGT</a>) is soaring 3.02 percent to 13.63. (up 2.24 percent since October 28).</li>
<li>ETFS Physical Palladium Shares (NYSE: <a class="ticker" href="/stock/pall#NYSE">PALL</a>) is up 2.04 percent on the day, trading at $64. Shares are flat for the last 30 days and up 18 percent year-to-date.</li>
<li>iPath Bloomberg Copper Subindex Total Return Sub-Index (NYSE: <a class="ticker" href="/stock/jjc#NYSE">JJC</a>) is up 2.65 percent on the day and 10 percent year-to-date.</li>
<li>iShares Silver Trust (ETF) (NYSE: <a class="ticker" href="/stock/slv#NYSE">SLV</a>) is up 1.04 percent to 17.47 compared to the 16.87 it traded on October 28.</li>
<li>Market Vectors Gold Miners ETF (NYSE: <a class="ticker" href="/stock/gdx#NYSE">GDX</a>) is gaining 0.91 percent to 24.30, adding onto the 1.13 percent gain since October 28.</li>
<li>ProShares Ultra Silver (ETF) (NYSE: <a class="ticker" href="/stock/agq#NYSE">AGQ</a>) is up 4.7 percent on the day, trading at $44.99. It is up over 66 percent year-to-date and 13 percent over the last month.</li>
<li>SPDR Gold Trust (ETF) (NYSE: <a class="ticker" href="/stock/gld#NYSE">GLD</a>) is up a modest 0.15 percent at 122.34. On October 28, the fund ended at 121.58.</li>
</ul>

With year-to-date losses of just under 30 percent, the ETFS Physical Platinum Shares (NYSE: <a class="ticker" href="/stock/pplt#NYSE">PPLT</a>) and the ETFS Physical Palladium Shares (NYSE: <a class="ticker" href="/stock/pall#NYSE">PALL</a>) are easily the worst performers among the major precious metals exchange-traded funds.
The SPDR Gold Trust (ETF) (NYSE: <a class="ticker" href="/stock/gld#NYSE">GLD</a>) is down just 10.6 percent, while the iShares Silver Trust (NYSE: <a class="ticker" href="/stock/slv#NYSE">SLV</a>) looks good compared to PALL and PPLT with a year-to-date loss of 12.6 percent. Shrewd commodities and ETF investors know better than to be fooled by silver.
<bzrelatedlink>Related Link: <a href="http://www.benzinga.com/analyst-ratings/analyst-color/15/12/6045280/miners-the-best-way-to-play-a-rate-hike">Miners: The Best Way To Play A Rate Hike?</a></bzrelatedlink>
Flows data have proven to be accurate harbingers of silver&#39;s recent fate, and traders are getting it right with inverse, leveraged silver ETFs&mdash; something that is not always the case with<a href="http://www.benzinga.com/trading-ideas/long-ideas/15/11/5969460/rate-hike-odds-shine-a-light-on-leveraged-gold-miners-etfs"> leveraged gold miners ETFs</a>.
 SLV and rival Silver Trust (NYSE: <a class="ticker" href="/stock/sivr#NYSE">SIVR</a>) have been losing assets as investors, concerned about the effects of higher interest rates on commodities, have continued departing precious metals ETFs.
<h3>The Commodities Concern</h3>
&ldquo;Since topping out in August 2011, commodity ETP assets have been in decline thanks to negative returns and sharp redemptions. Investors have yanked more than $22 billion out of commodity ETPs over this period,&rdquo; according to <a href="http://news.morningstar.com/articlenet/article.aspx?id=716810">Morningstar</a>.
However, what long-term investors should concern themselves with is long-term, risk-adjusted returns &ndash; and that outlook is bleak for commodities because, as Morningstar&#39;s data indicate, portfolios including commodities result in lower Sharpe Ratios than traditional 60 percent equity/40 percent fixed income portfolios.
Translation: These are the days for risk-tolerant traders to consider inverse silver exchange-traded products, including the ProShares UltraShort Silver (ETF) (NYSE: <a class="ticker" href="/stock/zsl#NYSE">ZSL</a>) and the Credit Suisse AG - VelocityShares 3x Inverse Silver ETN (NYSE: <a class="ticker" href="/stock/dslv#NYSE">DSLV</a>).
<h3>Inverse Silver</h3>
&ldquo;This morning we see SLV barely trading above another 2015 low registered just yesterday in the product, and 2015 in general has been brutal for the metal and related precious metals, since none of them trade in a vacuum. Even though it has performed well this year being on the bearish side of Silver prices, ZSL only has $55 million in assets under management and has seen modest outflows (-$12 million) year-to-date in spite of its timeliness,&rdquo; said <a href="http://streetonefinancial.com/">Street One Financial</a> Paul Weisbruch in a note out Tuesday. 
DSLV attempts to deliver triple the daily inverse returns of the S&amp;P GSCI Silver Index Excess Return while ZSL, the ProShares product, seeks to deliver double the daily inverse returns of silver prices at the London fixing.
 ZSL is up nearly 13 percent over the past three months while DSLV is higher by 16.7 percent over that period.
Image Credit: <a href="https://pixabay.com/en/abstract-alloy-aluminum-backdrop-18906/">Public Domain</a>

Intraday Update

DSLV

SIVR

Possibly The Only Silver ETFs To Be Concerned With

Gold and corresponding exchange-traded products have gotten some negative attention this week following the Federal Reserve&#39;s latest meeting. Although the Fed opted to once again stand pat on interest rates, market observers are adjusting their expectations upward in anticipation that the central bank will boost borrowing costs in December.

	That is good news for the dollar and bad news for dollar-denominated commodities, such as precious metals. Platinum- and palladium-backed ETFs are also being pinched by speculation that the Fed is close raising rates...sort of.

	&ldquo;Platinum-backed funds have seen outflows of just over 160,000 ounces so far in October, taking their holdings to their lowest since early 2014 at 2.232 million ounces. The bulk of the selling was seen from the Johannesburg-listed NewPlat ETF operated by Absa Capital, which has seen its holdings fall 134,000 ounces this month,&rdquo; reported <a href="http://www.reuters.com/article/2015/10/30/platinum-etf-outflows-idUSL8N12U3YL20151030">Reuters</a>.

	<bzrelatedlink>Related Link: <a href="http://www.benzinga.com/trading-ideas/long-ideas/15/10/5896788/commodities-etfs-want-to-get-back-into-your-portfolio">Commodities ETFs Want To Get Back Into Your Portfolio</a></bzrelatedlink>
<h3>
	Palladium And Platinum Stories In The U.S.</h3>

	The outflows story for palladium and platinum ETFs listed in the U.S. is a bit more sanguine. This month, the ETFS Physical Palladium Shares (NYSE: <a class="ticker" href="/stock/pall#NYSE">PALL</a>) and the ETFS Physical Platinum Shares (NYSE: <a class="ticker" href="/stock/pplt#NYSE">PPLT</a>) have lost just $12.9 million in assets combined.

	As far as PALL is concerned, modest asset loss is not surprising as traders have perhaps been looking to take profits in the palladium ETF after the fund <a href="http://www.benzinga.com/trading-ideas/long-ideas/15/10/5884532/the-palladium-etf-is-the-ultimate-volkswagen-victor">surged on the back</a> of the Volkswagen AG (ADR) (OTC: <a class="ticker" href="/stock/vlkay#OTC">VLKAY</a>) controversy.

	In terms of price action, PALL is off just a tenth of a percent this month, while PPLT has surged nearly 9 percent.

	Although some commodities investors and traders outside of the United States have become cautious on palladium and platinum, an obvious equity-based derivative play on the prices of those metals has been soaring this month as well.
<h3>
	Beyond The U.S.</h3>

	The iShares MSCI South Africa Index (ETF) (NYSE: <a class="ticker" href="/stock/eza#NYSE">EZA</a>) is up 5.5 percent this month. Though that performance lags the MSCI Emerging Markets Index by about 50 basis points, EZA&#39;s October strength is impressive on a couple of levels.

	First, South Africa is the world&#39;s largest platinum-producing country and the second-largest palladium producer behind Russia. That is to say, although the materials sector is not a significant part of EZA, price action in those metals looms large for South African equities.

	Second, investors, to the extent that they can be, appear comfortable with the fact that South Africa could very well be the next emerging market to suffer a <a href="http://www.benzinga.com/trading-ideas/long-ideas/15/10/5934918/this-emerging-markets-etf-could-have-to-endure-a-credit-downg">sovereign credit downgrade</a> at the hands of one of the major ratings agencies. Maybe Turkey will beat South Africa to that dubious punch, but a rating downgrade is still on the table for Africa&#39;s second-largest economy.

	Image Credit: By Stephen B Streater (Own work) [<a href="https://upload.wikimedia.org/wikipedia/commons/4/48/One_litre_of_Platinum.jpg">Public domain</a>], via Wikimedia Commons; One Litre of Platinum

VLKAY

A Pinch For Palladium, Platinum ETFs

It has been less than a month and a half since Standard &amp; Poor&#39;s stripped Brazil of an investment-grade credit rating, sending Latin America&#39;s largest economy to junk status. Since then, market participants have speculated about which emerging market will be next to lose an investment-grade rating.

	As some recent <a href="http://www.ft.com/intl/cms/s/3/47da8ae6-5878-11e5-9846-de406ccb37f2.html?ftcamp=published_links/rss/markets/feed//product#axzz3lIZWXUcq">media reports suggest</a>, the emerging markets patch has plenty of candidates that could suffer ratings downgrades, including Turkey. In May, S&amp;P downgraded its rating on Turkey&#39;s lira, one of this year&#39;s worst-performing emerging markets currencies to &quot;BBB-/A-3&quot; from &quot;BBB/A-2.&rdquo; At the time, the ratings agency said there is in a one-in-three chance it could <a href="http://www.benzinga.com/news/15/09/5834560/turkey-etf-could-be-next-to-be-stung-by-credit-downgrade">downgrade Turkey&#39;s sovereign </a>in six to 12 months.

	Turkey may have some competition from South Africa for next emerging market to see its sovereign credit rating sent to junk. With the iShares MSCI South Africa ETF (NYSE: <a class="ticker" href="/stock/eza#NYSE">EZA</a>) down 17 percent over the past six months, it is easy to see why.

	Related Link: <a href="http://www.benzinga.com/trading-ideas/long-ideas/15/10/5934893/a-winning-dividend-etf-for-market-tumult">A Winning Dividend ETF For Market Tumult</a>

	&ldquo;South Africa took a step closer to another credit-rating downgrade as a slowing economy forced Finance Minister Nhlanhla Nene to boost debt at the same time that mounting spending pressures fueled protests against the government,&rdquo; <a href="http://www.bloomberg.com/news/articles/2015-10-22/south-africa-faces-downgrade-risk-with-budget-marred-by-protests">reports Bloomberg</a>.

	S&amp;P currently rates debt issued by South Africa, Africa&#39;s second-largest economy behind Nigeria, BBB-, the lowest investment grade. Fitch Ratings rates South African bonds BBB while Moody&#39;s Investors Service has a Baa2 rating on South Africa. Moody&#39;s and S&amp;P have stable outlooks on their ratings of South African debt while Fitch has a negative outlook.

	Looking at the performances of the ETFS Physical Platinum Shares (NYSE: <a class="ticker" href="/stock/pplt#NYSE">PPLT</a>) and the ETFS Physical Palladium Shares (NYSE: <a class="ticker" href="/stock/pall#NYSE">PALL</a>) explains some EZA&#39;s woes this year. Those precious metals are down an average of 16.5 percent year-to-date and that is bad news for the South African economy because the country is the world&#39;s largest platinum producer and the second-largest palladium producer behind Russia.

	The $408.2 million EZA is not significantly exposed to those swooning metals as the materials sector accounts for just 5.5 percent of the ETF&#39;s weight. Five other sectors command bigger weights in the lone South Africa-specific ETF.

	Still, EZA and South Africa face other risks to retention of an investment-grade credit rating, namely massive unemployment. In May, South Africa&#39;s jobless rate hit an 11-year high at 26.4 percent before falling to 25 percent by the end of the second quarter. At 25 percent, South Africa&#39;s unemployment rate is nearly triple that of Brazil&#39;s.

This Emerging Markets ETF Could Have To Endure A Credit Downgrade

During the halcyon days of quantitative easing, dollar weakness and inflation expectations, commodities exchange traded products were hits. Just five years ago, there was $125 billion in assets under management across commodities exchange-traded funds and exchange traded notes (ETNs) and there was a time, albeit brief, when the SPDR Gold Trust (ETF) (NYSE: <a class="ticker" href="/stock/gld#NYSE">GLD</a>) was the largest ETF in the world.
	Over the past year, commodities ETFs have been beset by dismal performances and massive outflows, prompting some investors to question the value of commodities as core portfolio holdings, even in modest allocations.
<h3>What Commodities Are Doing</h3>

	While the PowerShares DB US Dollar Index Bullish (NYSE: <a class="ticker" href="/stock/uup#NYSE">UUP</a>), the U.S. dollar index tracking ETF, has climbed 9.3 percent over the past year, commodities ETFs have been decimated. For example, GLD and the iShares Silver Trust (ETF) (NYSE: <a class="ticker" href="/stock/slv#NYSE">SLV</a>) have posted an average loss of 6.5 percent, while the United States Oil Fund LP (ETF) (NYSE: <a class="ticker" href="/stock/uso#NYSE">USO</a>) has plunged 53.4 percent. Outflows have come along with those troubling showings.
<bzrelatedlink>Related Link: <a href="http://www.benzinga.com/trading-ideas/long-ideas/15/10/5896793/tardy-to-the-party-but-goldman-sachs-is-already-an-etf-force">Tardy To The Party, But Goldman Sachs Is Already An ETF Force</a></bzrelatedlink>

	&ldquo;Consider that at the end of 2005, there was less than $5 billion invested in U.S.-listed commodity ETPs. About five years later, after a period of exponential growth, assets in commodity ETPs topped out around $125 billion. By this time, investors started to learn about terms like contango and backwardation, realizing that they needed to adjust their expectations.
&ldquo;Since topping out in August 2011, commodity ETP assets have been in decline thanks to negative returns and sharp redemptions. Investors have yanked more than $22 billion out of commodity ETPs over this period,&rdquo; according to <a href="http://news.morningstar.com/articlenet/article.aspx?id=716810">Morningstar</a>.
<h3>Where's The Dollar Now, And What's That Mean Thesis-Wise?</h3>
With some market observers noting that the dollar&#39;s strength is still in the early to middle innings, a large part of the bullish thesis for commodities has been eroded. Further erosion is found when evaluating data that suggest commodities are not as negatively correlated to bonds and equities as the asset class<a href="http://www.benzinga.com/trading-ideas/long-ideas/15/09/5850194/dollar-etfs-really-need-interest-rates-to-rise-this-year"> once was</a>.
<h3>Looking At Commodities' 'Vulnerability'</h3>
As Morningstar noted, a study by professors Gary Gorton and Geert Rouwenhorst highlighted disappointing correlation data for commodities futures.

	&ldquo;The results speak for themselves: Over the past 15 years, an allocation to commodities has generally resulted in lower returns and greater risk,&rdquo; according to Morningstar.

	Commodities ETFs still have utility as trading vehicles. Traders that know USO can be vulnerable to contango can still use the ETF as a short-term trading vehicle and plenty do. And <a href="http://www.benzinga.com/trading-ideas/long-ideas/15/10/5884532/the-palladium-etf-is-the-ultimate-volkswagen-victor">as recently reported</a>, no ETF has benefited from the Volkswagen AG (ADR) (OTC: <a class="ticker" href="/stock/vlkay#OTC">VLKAY</a>) scandal on par with the ETFS Physical Palladium Shares (NYSE: <a class="ticker" href="/stock/pall#NYSE">PALL</a>).
<bzrelatedlink>Related Link: <a href="http://www.benzinga.com/trading-ideas/long-ideas/15/10/5884532/the-palladium-etf-is-the-ultimate-volkswagen-victor">The Palladium ETF Is The Ultimate Volkswagen Victor</a></bzrelatedlink>

	However, what long-term investors should concern themselves with is long-term, risk-adjusted returns &ndash; and that outlook is bleak for commodities because, as Morningstar&#39;s data indicate, portfolios including commodities result in lower Sharpe Ratios than traditional 60 percent equity/40 percent fixed income portfolios.
Image Credit: <a href="https://pixabay.com/en/chart-shares-dax-dow-jones-594212/">Public Domain</a>

PowerShares DB US Dollar Index Bullish Fund

Commodities ETFs Want To Get Back Into Your Portfolio

Some well-known exchange traded funds have been ensnared in the controversy surrounding Volkswagen AG (OTC: <a class="ticker" href="/stock/vlkay#OTC">VLKAY</a>), for the better and the worse.

	The iShares MSCI Germany ETF (NYSE: <a class="ticker" href="/stock/ewg#NYSE">EWG</a>) and the First Trust NASDAQ Global Auto Index Fund (NASDAQ: <a class="ticker" href="/stock/carz#NASDAQ">CARZ</a>) are among the notable ETFs that have been plagued by the precipitous drop in Volkswagen&#39;s American depositary receipts (ADRs). And as has been duly noted, no ETF has benefited from Volkswagen&#39;s woes in similar fashion to the ETFS Physical Palladium Shares (NYSE: <a class="ticker" href="/stock/pall#NYSE">PALL</a>).

	Volkswagen&#39;s woes have been a boon for PALL for a simple reason: Diesel automobiles require platinum for the production of catalytic converters, and it is diesel that has gotten Volkswagen in trouble. Palladium is used in the production of catalytic converters for gasoline-powered automobiles, so traders have bet what is bad for Volkswagen is good for palladium demand, powering PALL to a one-month gain of more than&nbsp;<a href="http:// http://www.benzinga.com/trading-ideas/long-ideas/15/10/5884532/the-palladium-etf-is-the-ultimate-volkswagen-victor">19 percent</a>.

	Related Link: <a href="http://www.benzinga.com/news/15/09/5875478/can-volkswagen-weather-the-diesel-storm">Can Volkswagen Weather The Diesel Storm?</a>

	An overlooked ETF that has been caught up in the Volkswagen imbroglio is $5.46 million First Trust ISE Global Platinum Index Fund (NASDAQ: <a class="ticker" href="/stock/pltm#NASDAQ">PLTM</a>). With a name like that, it is easy to understand why the First Trust ISE Global Platinum Index Fund has tumbled 10.1 percent over the past month. After all, platinum is the metal used in the production of catalytic converters for diesel automobiles.

	However, PLTM jumped 3.5 percent last week perhaps because market participants took a closer look at the ETF. PLTM does not just hold platinum. The ETF holds shares of companies engaged in the mining and production of platinum group metals (PGMs), an important point because PGMs include platinum <a href="http://www.ftportfolios.com/retail/etf/etfsummary.aspx?Ticker=PLTM">as well as palladium</a>, osmium, iridium, ruthenium and rhodium.

	Before rushing to commit capital to PLTM, investors and traders should be aware of something interesting surrounding the ETF. Home to 18 stocks, PLTM celebrated its fifth anniversary in March, but as was noted earlier, the ETF has just over $5 million in assets under management. In theory, an ETF of that age and size would be vulnerable to closure.

	However, First Trust is not throwing in the towel on PLTM. Rather, the Illinois-based ETF issuer has proposed re-configuring PLTM as an agriculture equities fund.

	Last week, First Trust issued a statement saying it will reconvene a meeting on October 12 that could ultimately decide PLTM&#39;s future.

	&ldquo;On June 18, 2015, FTA announced that it would seek shareholder approval for changes to the Fund&rsquo;s investment objective. Subject to shareholder approval, the Fund&rsquo;s new investment objective will be to seek investment results that correspond generally to the price and yield (before the Fund&rsquo;s fees and expenses) of an equity index called the Indxx Global Agriculture Index (the &ldquo;Agriculture Index&rdquo;). The Agriculture Index is developed, maintained and sponsored by Indxx, LLC,&rdquo; <a href="http://finance.yahoo.com/news/first-trust-announces-adjournment-special-214000608.html">according to the statement</a>.

	Essentially, the point of the October 12 meeting is to give PLTM shareholders that have not voted on the ETF&#39;s conversion to an agriculture fund more time to vote. In other words, PLTM could soon cease to exist as investors currently know it.

	Image Credit: <a href="https://pixabay.com/en/vw-volkswagen-car-vehicle-438825/">Public Domain</a>

CARZ

First Trust ISE Global Platinum Index Fund

PLTM

An Overlooked ETF Caught In The Crosshairs Of The Volkswagen Scandal

Despite a gloomy September jobs report, the bad news is good news mantra was back in play last Friday as all three major U.S. indexes finished the day with gains well in excess of one percent. However, traders and investors still face ample indecision with which to contend in the coming week.

	Now that the fourth quarter has started, market participants can start bracing for third-quarter earnings reports. In the week ahead, there are a just a few marquee names report, but one earnings-related play from the world of exchange traded fund to be mindful of is the Consumer Discretionary Select SPDR (NYSE: <a class="ticker" href="/stock/xly#NYSE">XLY</a>) because several of the companies stepping into the earnings confessional this week hail from the discretionary sector.

	&ldquo;Overall, corporate earnings are expected to fall by 4.1 percent, according to Thomson Reuters data. That figure is skewed, however, by an expected 65 percent fall in energy sector results,&rdquo; <a href="http://finance.yahoo.com/news/investors-brace-stocks-fall-again-112031064.html">Reuters</a> reports.&nbsp;

	Last week&#39;s top asset-gathering ETFs shed little light on what traders are feeling about the Federal Reserve&#39;s plans for interest rates. The fact that the rate-sensitive Consumer Staples Select Sector SPDR (NYSE: <a class="ticker" href="/stock/xlp#NYSE">XLP</a>) and the even more rate-sensitive Utilities Select Sector SPDR (NYSE: <a class="ticker" href="/stock/xlu#NYSE">XLU</a>) were among last week&#39;s top 10 asset gatherers, indicates some traders are expecting the Fed to keep rates where they are.

	On the other hand, the fact that the cyclical Industrial Select Sector SPDR (NYSE: <a class="ticker" href="/stock/xli#NYSE">XLI</a>) also made an appearance in the top 10 could be a sign that some money managers are bracing for Fed liftoff. Either that or some professionals are seeing opportunity with industrials, one of this year&#39;s <a href="http://www.benzinga.com/trading-ideas/long-ideas/15/09/5829996/industrial-etfs-are-still-scuffling">worst-performing sectors</a>.&nbsp;

	For the ultimate contrarian, there is opportunity afoot with emerging markets ETFs, but know that is a statement, not an endorsement. Last week, 15 of the top 20 non-leveraged ETFs were emerging markets ETFs, a group that includes the beaten up iShares MSCI Brazil Capped ETF (NYSE: <a class="ticker" href="/stock/ewz#NYSE">EWZ</a>) <a href="http://www.benzinga.com/trading-ideas/long-ideas/15/09/5867635/etf-bears-growl-south-of-the-border">and several China ETFs</a>.&nbsp;

	Emerging markets are the ultimate contrarian trade right now because investors cannot get away from developing world stocks fast enough. Third-quarter outflows from developing world stocks were the first since 2009 and the worst since 2008. The Vanguard FTSE Emerging Markets ETF (NYSE: <a class="ticker" href="/stock/vwo#NYSE">VWO</a>) and the iShares MSCI Emerging Markets ETF (NYSE: <a class="ticker" href="/stock/eem#NYSE">EEM</a>), the two largest emerging markets ETFs by assets, <a href="http://www.benzinga.com/trading-ideas/long-ideas/15/10/5883111/egregious-offense-traders-miss-out-on-the-right-emerging-mark">lost over $6.5 billion last quarter</a>.

	Speaking of contrarian ideas, the Market Vectors Gold Miners ETF (NYSE: <a class="ticker" href="/stock/gdx#NYSE">GDX</a>) certainly belongs in that conversation. The disappointing jobs report elicited a rally in gold, which was a boon for GDX as the largest gold miners ETF surged over eight percent.

	This paints the picture of how much GDX and rival gold miners ETFs have struggled this year: Even with last Friday&#39;s eight percent surge, one accrued on volume that was nearly 80 percent above average, still leaves GDX down 21.1 percent year-to-date. The good news is last week&#39;s surge lifted GDX above its 20- and 50-day moving averages.

	Commodities exchange traded products have been thrashed this year, but of the fewer than 30 ETFs that have posted double-digit gains over the past month, 10 are commodities ETFs or ETNs. That group includes, the ETFS Physical Palladium Shares (NYSE: <a class="ticker" href="/stock/pall#NYSE">PALL</a>).

	PALL has been <a href="http://www.benzinga.com/trading-ideas/long-ideas/15/10/5884532/the-palladium-etf-is-the-ultimate-volkswagen-victor#/null">the prime beneficiary</a> of scandal-plagued Volkswagen AG&#39;s (OTC: <a class="ticker" href="/stock/vlkay#OTC">VLKAY</a>) woes. However, PALL&#39;s 19.5 percent one-month gain could make the ETF ripe for some near-term profit-taking.

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The American depositary receipts (ADRs) of German automotive giant Volkswagen AG (ADR) (OTC: <a class="ticker" href="/stock/vlkay#OTC">VLKAY</a>) are down more than 3 percent at this writing Friday and have touched a new 52-week low.
	Volkswagen ADRs have plunged 36.5 percent over the past month following an emissions scandal and reports of fraudulent software in a sizable percentage of Volkswagen models on the road in the United States.

	As <a href="http://www.benzinga.com/analyst-ratings/analyst-color/15/09/5876864/a-different-way-to-bet-against-volkswagen">reported earlier this week</a>, Teo Lasarte, Bank of America Merrill Lynch analyst, &ldquo;sees four potential risks to the company as the Volkswagen emissions scandal continues to play out.&rdquo;
<bzrelatedlink>Related Link: <a href="http://www.benzinga.com/analyst-ratings/analyst-color/15/10/5884227/volkswagens-risks-may-be-overlooked-despite-press-disast">Volkswagen Risks May Be Overlooked Despite Press Disaster, Analyst Warns</a></bzrelatedlink>
The report continued, &ldquo;Risks include regulatory fines, lawsuits, recall costs and a potential capital increase to the company&rsquo;s financial segment. At this time, developments are too early-stage for Bank of America to attempt to quantify these risks accurately, but Lasarte estimated that the company could face &euro;26.5 billion in liabilities.&rdquo; 
Lasarte is just one analyst. Others have heaped bearish calls on Volkswagen as well, and with the risks outlined by Lasarte nowhere close to being resolved, it is reasonable to expect the sell side will not be warming to Volkswagen anytime soon.
<h3>Volkswagen And ETFs</h3>
Volkswagen&#39;s negative impact on exchange-traded funds has not been too dramatic, but there has been fallout. For example, the iShares MSCI Germany Index Fund (ETF) (NYSE: <a class="ticker" href="/stock/ewg#NYSE">EWG</a>) is off more than 5 percent over the past month, as its weight to Volkswagen has dwindled to just 1.7 percent.
 The First Trust NASDAQ Global Auto Index Fund (First Trust Exchange-Traded Fund II (NASDAQ: <a class="ticker" href="/stock/carz#NASDAQ">CARZ</a>)), the only dedicated automotive ETF, is lower by 2.2 percent over the past month. CARZ has a Volkswagen weight of less than 2.4 percent, <a href="http://www.ftportfolios.com/Retail/Etf/EtfHoldings.aspx?Ticker=CARZ">according to First Trust data</a>.
Just as EWG, CARZ and other ETFs have struggled in the wake of the Volkswagen scandal, the ETFS Physical Palladium Shares
 (NYSE: <a class="ticker" href="/stock/pall#NYSE">PALL</a>) has flourished. Perhaps precious metals are trading higher Friday because of the slack September jobs report. However, PALL is up 3.4 percent at this writing on volume that has already eclipsed the daily average because Volkswagen ADRs are lower. Friday&#39;s jump brings PALL&#39;s one-month gain to 21.6 percent.
Over the same period, the SPDR Gold Trust (ETF) (NYSE: <a class="ticker" href="/stock/gld#NYSE">GLD</a>), the largest commodities ETF, is up just 0.8 percent. PALL is the palladium equivalent of GLD, as the former holds physical palladium.
<bzrelatedlink>Related Link: <a href="http://www.benzinga.com/analyst-ratings/analyst-color/15/09/5876864/a-different-way-to-bet-against-volkswagen">A Different Way To Bet Against Volkswagen</a></bzrelatedlink>
<h3>Volkswagen And Palladium</h3>
Volkswagen&#39;s woes have been a boon for PALL for a simple reason: Diesel automobiles require platinum for the production of catalytic converters, and it is diesel that has gotten Volkswagen in trouble. Volkswagen explains why PALL&#39;s platinum-based cousin ETFS Physical Platinum Shares (NYSE: <a class="ticker" href="/stock/pplt#NYSE">PPLT</a>) is off nearly 10 percent over the past month.
Platinum now resides at its lowest levels in 13 years against palladium, <a href="http://www.platts.com/latest-news/metals/london/diesel-emission-scandal-sends-platinum-to-13-21220793">according to Platts</a>. For its part, palladium is the key ingredient in the production of catalytic converters for gasoline-based automobiles.
History has shown there are two fundamental catalysts that have the power to move PALL:
<li>1. Supply concerns, either by way of traders fretting about dwindling supply in Russia or labor strikes in South Africa. Russia and South Africa are the two largest palladium-producing nations.</li>
<li>2. Automotive demand. Most of the automobiles produced in the United States and China, the world&#39;s largest automotive markets, are gas-powered, meaning manufacturers require palladium, not platinum, for the production of catalytic converters.</li>
 Put simply, the longer Volkswagen&#39;s problems persist, the more upside potential PALL might have.
Image Credit: <a href="https://pixabay.com/en/vw-beetle-volkswagen-classic-car-238459/">Public Domain</a>

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