Etikett: AIGA

Stronger US Dollar pressures commodities

ETF Securities Stronger US Dollar pressures commodities ETPStronger US Dollar pressures commodities

Commodity ETP Weekly – Stronger US Dollar pressures commodities

•  Bargain-hunting sees Brent crude ETP inflows hit 11 week high
•  Gold shines for investors for the 9th consecutive week.
•  Outflows from agricultural ETPs reach 17-week high, totalling US$14.1mn.
•  Upcoming webinar: Global commodities, have we reached the floor in prices? Register here to attend

Download the complete report (.pdf)

• Strong inflows into long crude oil ETPs indicate contrarian nature of energy sector investors. However, bets on further price declines have increased as well, indicating polarised views.

• The rising potential of additional monetary stimulus from the European Central Bank is increasing the appeal of gold as a monetary hedge

Bargain-hunting sees Brent crude ETP inflows hit 11 week high. Last week we saw US$10.9mn into long Brent oil ETPs and US$46.4mn into long WTI oil ETPs. Oil prices have declined to the lowest level since August 2015, helping to drive bargain-hunting inflows of US$174.3mn over the past five weeks into oil ETPs. Oil prices have fallen to the lowest levels since August, as supply remains abundant. The IEA reported that record OECD stockpiles of 3bn barrels are comforting for the market, amid declining refinery capacity as a result of seasonal maintenance. Although the IEA expects weaker demand growth next year, US tight oil supply is also expected to decline in 2016. Nonetheless, ETP investors remain somewhat contrarian and are viewing the sector as attractively valued.

While some investors are bargain-hunting, others are expecting further price declines. Inflows into ETFS Daily Short WTI Crude Oil (SOIL) hit the highest level since 2011, with US13.5mn of inflows last week.

Gold shines for investors for the 9th consecutive week. Despite further declines in price, investors continued to increase portfolio allocations to gold. Rising rate hike expectations in the US have continued to pressure gold (priced in USD), with prices reaching the lowest level since August 2015. However, in Euro terms, gold has been a solid performing asset, as it becomes increasingly clear that the European Central Bank plans to extend or expand its stimulus program in December. We believe that gold as a monetary hedge is a primary reason for investor inflows, with gold (in Euros) rising 3.6% during 2015. Further monetary stimulus is likely to lead to further Euro weakness, a gain for European investors in the precious metal.

Outflows from agricultural ETPs reach 17-week high, totalling US$14.1mn. Declining prices prompted the third consecutive weekly outflows from agricultural sector ETPs. ETFS Agriculture (AIGA) bore the brunt of the outflows, experiencing withdrawals of US$11.8mn. Over 60% of the constituents of the broad agriculture index experienced declines last week, with wheat and coffee leading way.

Key events to watch this week. Investors will be assessing the prospects for the US dollar this week, given the recent pressure it has applied to commodity prices: US inflation readings are likely to be a key focus for investors, giving some indication of the amount of pipeline inflation pressure and the potential for rate hikes in the US. The FOMC minutes will also be deconstructed to gauge not only the timing but the pace of rate hikes in 2016.

For more information contact

ETF Securities Research team
ETF Securities (UK) Limited
T +44 (0) 207 448 4336
E info@etfsecurities.com

Important Information

General

This communication has been provided by ETF Securities (UK) Limited (”ETFS UK”) which is authorised and regulated by the United Kingdom Financial Conduct Authority.

This is a strictly privileged and confidential communication between ETFS UK and its selected client. This communication contains information addressed only to a specific individual and is not intended for distribution to, or use by, any person other than the named addressee. This communication (i) is provided for informational purposes only, (ii) should not be construed in any manner as any solicitation or offer to buy or sell any securities or any related financial instruments, and (iii) should not be construed in any manner as a public offer of any securities or any related financial instruments. If you are not the named addressee, you should not disseminate, distribute or copy this communication. Please notify the sender immediately if you have mistakenly received this communication. When being made within Italy, this communication is for the exclusive use of the ”qualified investors” and its circulation among the public is prohibited.

This document is not, and under no circumstances is to be construed as, an advertisement or any other step in furtherance of a public offering of shares in the United States or any province or territory thereof. Neither this document nor any copy hereof should be taken, transmitted or distributed (directly or indirectly) into the United States.

This document may contain independent market commentary prepared by ETFS UK based on publicly available information. ETFS UK does not warrant or guarantee the accuracy or correctness of any information contained herein and any opinions related to product or market activity may change. Any third party data providers used to source the information in this communication make no warranties or representation of any kind relating to such data.

Any historical performance included in this document may be based on back testing. Back tested performance is purely hypothetical and is provided in this document solely for informational purposes. Back tested data does not represent actual performance and should not be interpreted as an indication of actual or future performance.

Historical performance is not an indication of or a guide to future performance.

The information contained in this communication is neither an offer for sale nor a solicitation of an offer to buy securities. This communication should not be used as the basis for any investment decision.

ETFS UK is required by the United Kingdom Financial Conduct Authority (”FCA”) to clarify that it is not acting for you in any way in relation to the investment or investment activity to which this communication relates. In particular, ETFS UK will not provide any investment services to you and or advise you on the merits of, or make any recommendation to you in relation to, the terms of any transaction. No representative of ETFS UK is authorised to behave in any way which would lead you to believe otherwise. ETFS UK is not, therefore, responsible for providing you with the protections afforded to its clients and you should seek your own independent legal, investment and tax or other advice as you see fit.

Risk Warnings

Any products referenced in this document are generally aimed at sophisticated, professional and institutional investors. Any decision to invest should be based on the information contained in the prospectus (and any supplements thereto) of the relevant product issue. The price of any securities may go up or down and an investor may not get back the amount invested. Securities may valued in currencies other than those in which there are priced and will be affected by exchange rate movements. Investments in the securities which provide a short and/or leveraged exposure are only suitable for sophisticated, professional and institutional investors who understand leveraged and compounded daily returns and are willing to magnify potential losses by comparison to investments which do not incorporate these strategies. Over periods of greater than one day, investments with a short and/or leveraged exposure do not necessarily provide investors with a return equivalent to a return from the unleveraged long or unleveraged short investments multiplied by the relevant leverage factor. Investors should refer to the section entitled ”Risk Factors” in the relevant prospectus for further details of these and other risks associated with an investment in any securities referenced in this communication.

If you have any questions please contact ETFS UK at +44 20 7448 4330 or info@etfsecurities.com for more information.

Stimulus helps global economic outlook

Stimulus helps global economic outlook

Commodity ETP Weekly – Stimulus helps global economic outlook

•  Diversified commodity exposures see month long inflows.
•  Agricultural ETP inflows reach 7-week high.
•  Seventh consecutive weekly inflow into energy ETPs, led by crude.
•  Gold inflows top sector as central banks remain in stimulus mode.
•  Upcoming webinar: Commodities – Is the Outlook Changing? Register here to attend

Download the complete report (.pdf)

Central banks from Europe to China are keeping the stimulus taps flowing alongside modest but encouraging signs of global recovery. While Chinese growth dipped under 7% for the first time since 2009, Chinese authorities remain ready to provide support and have the balance sheet to match. Alongside indications of resilient global activity commodity demand is likely to be supported as we head into year-end. In turn, sentiment towards commodities appears to be turning with investors increasing exposure to long diversified commodity ETPs. While the stronger US Dollar is likely to cap commodity gains in the near-term, particularly for precious metals, foreign investors are benefiting from weaker local currencies.

Diversified commodity exposures see month long inflows. ETPs with a diversified exposure to the commodities market as a whole have experienced a month-long run of inflows, totalling US$52mn over the period. The trend signifies that investor sentiment appears to be turning for commodities, the worst performing sector over the past four years. Investors are also increasing exposure to basket ETPs in each sector, with ETFS Agriculture (AIGA), ETFS Industrial metals (AIGI) and ETFS Energy (AIGE) all receiving inflows last week.

Agricultural ETP inflows reach 7-week high. ETFS Agriculture (AIGA) received the highest inflows in 10 weeks. AGRI inflows totalling US$5.7mn topped the agricultural sector, closely followed by the US$5.1mn inflows into coffee ETPs. Coffee inflows reached a 16-week high, as a plunge in coffee prices has attracted bargainhunters to the commodity. Overdue rainfall in Brazil sent prices over 10% lower last week, as expectations for a better crop rose.

Seventh consecutive weekly inflow into energy ETPs, led by crude. The energy sector has experienced one week of outflows over the past four months, with inflows totalling over US$550mn since late July. Oil prices declined last week, after the Energy Information Administration reported a large jump in inventory levels, more than double market expectations. Both WTI and Brent crude have dropped by over 10% since the recent early October peak. While this was the fourth consecutive weekly stock build, rig counts have been falling for the past eight weeks, giving investors’ confidence that the oil price is forming a bottom. Moreover, demand, particularly from China is seemingly robust, offsetting some concern of a sharp slowdown in the world’s second largest economy.

Gold inflows top sector as central banks remain in stimulus mode. The gold price has remained relatively resilient last week, retaining its gains over the past month as lingering concern stemming from recently softer global economic data is coupled with an increasing desire by central banks to be proactive in terms of monetary support. The European central bank appears keen to do more to offset what it sees as ‘downside risks’ to the economy, and additional stimulus raises the potential for further currency debasement, a supportive influence for monetary metals, particularly gold.

Key events to watch this week. After China and the ECB set the stage for greater central bank accommodation, such trends are likely to be positive for metals demand, particularly precious metals. Nevertheless, precious metals gains are likely to be capped, with the US Dollar strengthening after the ECB meeting last week. This week’s FOMC meeting will give clarity on future policy direction, and while we expect the FOMC to hike rates this year, it is unlikely to be this week.

For more information contact

ETF Securities Research team
ETF Securities (UK) Limited
T +44 (0) 207 448 4336
E info@etfsecurities.com

Important Information

General

This communication has been provided by ETF Securities (UK) Limited (”ETFS UK”) which is authorised and regulated by the United Kingdom Financial Conduct Authority.

This is a strictly privileged and confidential communication between ETFS UK and its selected client. This communication contains information addressed only to a specific individual and is not intended for distribution to, or use by, any person other than the named addressee. This communication (i) is provided for informational purposes only, (ii) should not be construed in any manner as any solicitation or offer to buy or sell any securities or any related financial instruments, and (iii) should not be construed in any manner as a public offer of any securities or any related financial instruments. If you are not the named addressee, you should not disseminate, distribute or copy this communication. Please notify the sender immediately if you have mistakenly received this communication. When being made within Italy, this communication is for the exclusive use of the ”qualified investors” and its circulation among the public is prohibited.

This document is not, and under no circumstances is to be construed as, an advertisement or any other step in furtherance of a public offering of shares in the United States or any province or territory thereof. Neither this document nor any copy hereof should be taken, transmitted or distributed (directly or indirectly) into the United States.

This document may contain independent market commentary prepared by ETFS UK based on publicly available information. ETFS UK does not warrant or guarantee the accuracy or correctness of any information contained herein and any opinions related to product or market activity may change. Any third party data providers used to source the information in this communication make no warranties or representation of any kind relating to such data.

Any historical performance included in this document may be based on back testing. Back tested performance is purely hypothetical and is provided in this document solely for informational purposes. Back tested data does not represent actual performance and should not be interpreted as an indication of actual or future performance.

Historical performance is not an indication of or a guide to future performance.

The information contained in this communication is neither an offer for sale nor a solicitation of an offer to buy securities. This communication should not be used as the basis for any investment decision.

ETFS UK is required by the United Kingdom Financial Conduct Authority (”FCA”) to clarify that it is not acting for you in any way in relation to the investment or investment activity to which this communication relates. In particular, ETFS UK will not provide any investment services to you and or advise you on the merits of, or make any recommendation to you in relation to, the terms of any transaction. No representative of ETFS UK is authorised to behave in any way which would lead you to believe otherwise. ETFS UK is not, therefore, responsible for providing you with the protections afforded to its clients and you should seek your own independent legal, investment and tax or other advice as you see fit.

Risk Warnings

Any products referenced in this document are generally aimed at sophisticated, professional and institutional investors. Any decision to invest should be based on the information contained in the prospectus (and any supplements thereto) of the relevant product issue. The price of any securities may go up or down and an investor may not get back the amount invested. Securities may valued in currencies other than those in which there are priced and will be affected by exchange rate movements. Investments in the securities which provide a short and/or leveraged exposure are only suitable for sophisticated, professional and institutional investors who understand leveraged and compounded daily returns and are willing to magnify potential losses by comparison to investments which do not incorporate these strategies. Over periods of greater than one day, investments with a short and/or leveraged exposure do not necessarily provide investors with a return equivalent to a return from the unleveraged long or unleveraged short investments multiplied by the relevant leverage factor. Investors should refer to the section entitled ”Risk Factors” in the relevant prospectus for further details of these and other risks associated with an investment in any securities referenced in this communication.

If you have any questions please contact ETFS UK at +44 20 7448 4330 or info@etfsecurities.com for more information.

Fears of China slowdown causes a rollercoaster week of trade

Fears of China slowdown causes a rollercoaster week of trade

ETF Securities Commodity ETP Weekly – Fears of China slowdown causes a rollercoaster week of trade

Highlights

•  Oil ETPs see nine consecutive weeks of inflows.

•  Industrial metals ETPs witness highest outflows in 7 weeks, led by ETFS Copper (COPA).

•  Gold ETPs see the second consecutive week of inflows of USD$19.1mn.

•  Outflows from palladium ETPs continue for the fourth consecutive week.

•  Investors trimmed exposure to ETFS Agriculture (AIGA) by US$13.7mn, the highest level in 7 weeks.

Download the complete report (.pdf)

Like most cyclical assets, commodities had an especially volatile week. Fears of a China slowdown following an equity market rout, led to the initial commodity price declines. However, the Bloomberg Commodity Index ended the week higher, driven by gains in oil and copper. Oil prices marked their strongest three day rally since 1990 after speculation the Organization of the Petroleum Exporting Countries may be considering cutting production. All eyes will be on the latest US jobs data and guidance by the ECB policymakers on quantitative easing amidst the global market rout.

Oil ETPs see nine consecutive weeks of inflows. After nose-diving to their lowest levels since 2009 last Tuesday, WTI and Brent crude oil prices staged their biggest one day surge on Thursday advancing 10 percent to US$43.5 and US$48.5 respectively. Over the past three trading sessions, WTI oil has surged 27% on hopes that OPEC will consider cutting production. Long oil ETPs attracted US$60.1mn after better than expected US GDP data revived hopes of strong demand. In addition, Royal Dutch Shell Plc’s force majeure on 2 pipelines cutting shipments from Nigeria and a decline in US crude oil stocks by 5.5mn barrels last week lent support to oil prices. ETFS Daily Leveraged Natural Gas (LNGA) saw its second week of inflows (of US$2.7mn) as bargain hunters attempt to capture any price recovery before the high demand summer driving season draws to a close.

Industrial metals ETPs witness highest outflows in 7 weeks, led by ETFS Copper (COPA). Despite copper ending the week higher, its volatile price and fears of a China slowdown led to US$16.5mn redemptions in COPA. Codelco, the world largest copper producer was the latest to join the industry wide effort to reduce capex as prices hover around 6 year lows.

Gold ETPs see the second consecutive week of inflows of USD$19.1mn. Gold maintained its safe haven status amidst the volatility in cyclical assets. Investors bought US$15.2mn physical gold ETPs last week. Despite the futures market and consensus expectations for a US rate increase being pushed out, gold fell 2.5% as a stronger-than-expected GDP reading for Q2 2015 underscores the strength in the underlying economy.

Outflows from palladium ETPs continue for the fourth consecutive week. Futures market net speculative long positions in palladium have dropped to a 3 year low at 5700 contracts highlighting how the fears of a weakening Chinese economy are denting demand for the most industrialised precious metal.

Investors trimmed exposure to ETFS Agriculture (AIGA) by US$13.7mn, the highest level in 7 weeks. Sugar was the best performer among commodities as wetter weather in Brazil and fears of the El Nino impacting production in India and Thailand lent support to price. Hot dry weather impacted EU supply, benefiting corn prices as the International Grains Council (IGC) forecasted a supply deficit of 4mn tons. Wheat prices came under pressure as the IGC predicted an annual surplus of 4mn tons as global wheat production is expected to reach last year’s record level 10mn tons.

Key events to watch this week. The ISM Manufacturing Index, the Federal Reserve’s beige book and the jobs data released remain in focus. Positive surprises in these indicators could provide insight into Federal Reserve’s interest rate trajectory.

Video Presentation

Aneeka Gupta, Research Analyst at ETF Securities provides an analysis of last week’s performance, flow and trading activity in commodity exchange traded products and a look at the week ahead.

For more information contact

ETF Securities Research team
ETF Securities (UK) Limited
T +44 (0) 207 448 4336
E info@etfsecurities.com

Important Information

General

This communication has been provided by ETF Securities (UK) Limited (”ETFS UK”) which is authorised and regulated by the United Kingdom Financial Conduct Authority.

This is a strictly privileged and confidential communication between ETFS UK and its selected client. This communication contains information addressed only to a specific individual and is not intended for distribution to, or use by, any person other than the named addressee. This communication (i) is provided for informational purposes only, (ii) should not be construed in any manner as any solicitation or offer to buy or sell any securities or any related financial instruments, and (iii) should not be construed in any manner as a public offer of any securities or any related financial instruments. If you are not the named addressee, you should not disseminate, distribute or copy this communication. Please notify the sender immediately if you have mistakenly received this communication. When being made within Italy, this communication is for the exclusive use of the ”qualified investors” and its circulation among the public is prohibited.

This document is not, and under no circumstances is to be construed as, an advertisement or any other step in furtherance of a public offering of shares in the United States or any province or territory thereof. Neither this document nor any copy hereof should be taken, transmitted or distributed (directly or indirectly) into the United States.

This document may contain independent market commentary prepared by ETFS UK based on publicly available information. ETFS UK does not warrant or guarantee the accuracy or correctness of any information contained herein and any opinions related to product or market activity may change. Any third party data providers used to source the information in this communication make no warranties or representation of any kind relating to such data.

Any historical performance included in this document may be based on back testing. Back tested performance is purely hypothetical and is provided in this document solely for informational purposes. Back tested data does not represent actual performance and should not be interpreted as an indication of actual or future performance.

Historical performance is not an indication of or a guide to future performance.

The information contained in this communication is neither an offer for sale nor a solicitation of an offer to buy securities. This communication should not be used as the basis for any investment decision.

ETFS UK is required by the United Kingdom Financial Conduct Authority (”FCA”) to clarify that it is not acting for you in any way in relation to the investment or investment activity to which this communication relates. In particular, ETFS UK will not provide any investment services to you and or advise you on the merits of, or make any recommendation to you in relation to, the terms of any transaction. No representative of ETFS UK is authorised to behave in any way which would lead you to believe otherwise. ETFS UK is not, therefore, responsible for providing you with the protections afforded to its clients and you should seek your own independent legal, investment and tax or other advice as you see fit.

Risk Warnings

Any products referenced in this document are generally aimed at sophisticated, professional and institutional investors. Any decision to invest should be based on the information contained in the prospectus (and any supplements thereto) of the relevant product issue. The price of any securities may go up or down and an investor may not get back the amount invested. Securities may valued in currencies other than those in which there are priced and will be affected by exchange rate movements. Investments in the securities which provide a short and/or leveraged exposure are only suitable for sophisticated, professional and institutional investors who understand leveraged and compounded daily returns and are willing to magnify potential losses by comparison to investments which do not incorporate these strategies. Over periods of greater than one day, investments with a short and/or leveraged exposure do not necessarily provide investors with a return equivalent to a return from the unleveraged long or unleveraged short investments multiplied by the relevant leverage factor. Investors should refer to the section entitled ”Risk Factors” in the relevant prospectus for further details of these and other risks associated with an investment in any securities referenced in this communication.

If you have any questions please contact ETFS UK at +44 20 7448 4330 or info@etfsecurities.com for more information.

China and strong USD fail to deter commodity bargain-hunters

China and strong USD fail to deter commodity bargain-hunters

ETF Securities Commodity ETP Weekly – China and strong USD fail to deter commodity bargain-hunters

Highlights

•    Inflows into long WTI crude and Brent oil ETPs continued for the 5th straight week.

•    Multiyear low prices attract bargain hunters to industrial metals ETPs.

•    Outflows from physically backed gold ETPs continue for the 11th consecutive week.

•    Physically backed platinum ETPs (PHPT) drew inflows of US$4.3mn while palladium ETPs saw outflows of US$7.4mn.

•    ETFS Agriculture (AIGA) received US$14.6mn of inflows last week.

Download the complete report (.pdf)

The jobs data in the US last week provided vital ammunition for the Federal Reserve to pull the trigger on interest rate increases later this year, adding to US dollar strength, which weighed on commodity prices. Interestingly gold remained resilient, seeing its price rise in US dollar terms for a second straight week, despite outflows from gold ETPs. The key to the commodity complex’s fortunes is China’s growth path and the market is on the lookout for further stimulus in the country.

Inflows into long WTI crude and Brent oil ETPs continued for the 5th straight week. WTI crude oil touched US$43.94 and Brent reached US$48.55, marking their lowest levels since 20th March and 29th January respectively this year. We believe that these low prices will provide high-cost producers the incentive to cut production, and will pave the way for price increases later in 2015. Bargain hunters have continued to accumulate positions at these depressed price levels, with long oil ETPs receiving US$88.6mn of inflows last week, the highest since March 2015.

Multiyear low prices attract bargain hunters to industrial metals ETPs. ETFS Aluminum (ALUM) and ETFS Copper ETPs (COPA) recorded US$15.5mn and US$10.7mn, their highest inflows in 12 and 18 weeks, respectively. A weaker-than-expected Chinese manufacturing purchasing managers index (PMI) reading of 50 and an unexpected decline in German industrial production (of -1.6%) pushed copper and aluminum prices to 6 year lows this week. However, China announced plans raise 1 trillion yuan in bonds to fund infrastructure projects which will likely increase the demand for industrial metals. Money manager net short positions in copper reported by the LME and Shanghai Futures Exchange have more than trebled over the past week and ETP investors are betting on a short-selling rally, should any supply side outages eventuate from weather related Chilean mine disruptions.

Outflows from physically backed gold ETPs continue for the 11th consecutive week. After the second consecutive week of price gains, outflows from physical gold ETPs slowed to US$41.1mn, the lowest in five weeks. The probability of a Fed rate hike in September rose to 56% following the sturdy US jobs data release. Gold however shrugged off the news and rose. Slowing outflows and steadying prices could mark the end of the gold rout, with Q3 a seasonally robust period for gold historically.

Physically backed platinum ETPs (PHPT) drew inflows of US$4.3mn while palladium ETPs saw outflows of US$7.4mn. BMW AG cut production last week amid weak auto demand in China. Approximately 70% of palladium demand comes from the autocatalyst market. Platinum has more diverse sources of demand, which helps explain why investors appear more optimistic about its outlook.

ETFS Agriculture (AIGA) received US$14.6mn of inflows last week. When combined with the previous week’s US$19.8mn of inflows, we saw the highest fortnightly inflows in to the agricultural basket since October 2014. With a strengthening El Niño potentially disrupting global crop production this year, we are could see sharp gains in agricultural prices as supply falls short of expectations.

Key events to watch this week. Industrial production data in the US, China and Japan will provide a gauge for industrial metal demand, while US retail sales and weekly jobs figures will help provide clarity on the US dollar’s strength.

Video Presentation

Aneeka Gupta, Research Analyst at ETF Securities provides an analysis of last week’s performance, flow and trading activity in commodity exchange traded products and a look at the week ahead.

For more information contact

ETF Securities Research team
ETF Securities (UK) Limited
T +44 (0) 207 448 4336
E info@etfsecurities.com

Important Information

General

This communication has been provided by ETF Securities (UK) Limited (”ETFS UK”) which is authorised and regulated by the United Kingdom Financial Conduct Authority.

This is a strictly privileged and confidential communication between ETFS UK and its selected client. This communication contains information addressed only to a specific individual and is not intended for distribution to, or use by, any person other than the named addressee. This communication (i) is provided for informational purposes only, (ii) should not be construed in any manner as any solicitation or offer to buy or sell any securities or any related financial instruments, and (iii) should not be construed in any manner as a public offer of any securities or any related financial instruments. If you are not the named addressee, you should not disseminate, distribute or copy this communication. Please notify the sender immediately if you have mistakenly received this communication. When being made within Italy, this communication is for the exclusive use of the ”qualified investors” and its circulation among the public is prohibited.

This document is not, and under no circumstances is to be construed as, an advertisement or any other step in furtherance of a public offering of shares in the United States or any province or territory thereof. Neither this document nor any copy hereof should be taken, transmitted or distributed (directly or indirectly) into the United States.

This document may contain independent market commentary prepared by ETFS UK based on publicly available information. ETFS UK does not warrant or guarantee the accuracy or correctness of any information contained herein and any opinions related to product or market activity may change. Any third party data providers used to source the information in this communication make no warranties or representation of any kind relating to such data.

Any historical performance included in this document may be based on back testing. Back tested performance is purely hypothetical and is provided in this document solely for informational purposes. Back tested data does not represent actual performance and should not be interpreted as an indication of actual or future performance.

Historical performance is not an indication of or a guide to future performance.

The information contained in this communication is neither an offer for sale nor a solicitation of an offer to buy securities. This communication should not be used as the basis for any investment decision.

ETFS UK is required by the United Kingdom Financial Conduct Authority (”FCA”) to clarify that it is not acting for you in any way in relation to the investment or investment activity to which this communication relates. In particular, ETFS UK will not provide any investment services to you and or advise you on the merits of, or make any recommendation to you in relation to, the terms of any transaction. No representative of ETFS UK is authorised to behave in any way which would lead you to believe otherwise. ETFS UK is not, therefore, responsible for providing you with the protections afforded to its clients and you should seek your own independent legal, investment and tax or other advice as you see fit.

Risk Warnings

Any products referenced in this document are generally aimed at sophisticated, professional and institutional investors. Any decision to invest should be based on the information contained in the prospectus (and any supplements thereto) of the relevant product issue. The price of any securities may go up or down and an investor may not get back the amount invested. Securities may valued in currencies other than those in which there are priced and will be affected by exchange rate movements. Investments in the securities which provide a short and/or leveraged exposure are only suitable for sophisticated, professional and institutional investors who understand leveraged and compounded daily returns and are willing to magnify potential losses by comparison to investments which do not incorporate these strategies. Over periods of greater than one day, investments with a short and/or leveraged exposure do not necessarily provide investors with a return equivalent to a return from the unleveraged long or unleveraged short investments multiplied by the relevant leverage factor. Investors should refer to the section entitled ”Risk Factors” in the relevant prospectus for further details of these and other risks associated with an investment in any securities referenced in this communication.

If you have any questions please contact ETFS UK at +44 20 7448 4330 or info@etfsecurities.com for more information.

Bargain-Hunting Signals a Shift in Sentiment

Bargain-Hunting Signals a Shift in Sentiment

Bargain-Hunting Signals a Shift in Sentiment – ETF Securities Commodity ETP Weekly

Contrarian investors drive inflows into long crude oil ETPs to a 19-week high.

ETFS Agriculture (AIGA) receives highest inflows since October 2014.

ETFS Physical Palladium (PHPD) inflows highest since November 2014 and ETFS Physical Platinum (PHPT) inflows highest since January 2015.

Gold ETPs continue to be shunned as investors dispose of defensive assets.

Download the complete report (.pdf)

The US dollar continued to appreciate (Dollar Index up 0.4% in the week), weighing on the commodity complex. With the Federal Reserve signaling that it is ready to raise rates subject to seeing “some” further improvement in the labour market, this week’s payroll numbers will be keenly watched. A strong reading could see more dollar strength. A supply glut in oil has reversed the premature rebound in prices we witnessed between March and June, providing the setting for supply tightening in the months to come. Commodity ETPs tracking oil, agriculture and platinum group metals have seen their flows benefit from bargain-hunting. Negative sentiment against gold continues.

Contrarian investors drive inflows into long crude oil ETPs to a 19-week high. Marking the fifth consecutive week of inflows, we saw US$52.5mn of flows into long Brent and WTI crude oil ETPs. When prices fell sharply between November 2014 and March 2015, we received strong inflows into oil ETPs as investors saw a bargain-hunting opportunity. The rebound in prices between March and June led to outflows as they took profit. The recent price declines are once again bringing bargain hunters back in the market. We believe the current low price environment will motivate cuts in capex amongst high cost producers and lead to higher prices over the medium term. Though, OPEC will continue to produce more oil as Saudi Arabia in particular seeks to gain market share. The nimble US shale oil industry will remain price responsive and will be able to increase production when prices rise. Most of the cuts in production will come from high-cost (e.g. deep-water, oil sand etc.) non-OPEC, non-US projects. Once those projects are deferred or even cancelled they will not come back quickly as they have long lead times. With OPEC operating so close to capacity, any shock to the market could lead to price spikes. Upside risks to price outweigh the downside at these levels.

ETFS Agriculture (AIGA) receives highest inflows since October 2014. With agricultural prices falling across the board last week (and indeed over the month), bargain hunters have sensed an opportunity. With a strengthening El Niño weather phenomenon, the likelihood of a disruption to crop production is high, potentially reversing the price declines in certain agricultural commodities. We saw US$19.8mn flow into AIGA and a further US$5.4mn flow into long wheat ETPs (a 12-week high). Grain prices were particularly hurt last week as the International Grains Council increased its grain harvest forecasts, despite Canadian and European dryness.

ETFS Physical Palladium (PHPD) inflows highest since November 2014, ETFS Physical Platinum (PHPT) inflows highest since January 2015. Receiving inflows of US$30.6mn and US$16.9mn respectively, the platinum group metals gained traction after weeks of outflows and price declines. Improving fundamentals including tighter environmental regulation (a source of demand for PGMs) and constrained mine-supply bode well for the metals.

Gold ETPs continue to be shunned as investors dispose of defensive assets. A further US$163.5mn of outflows from long gold ETPs last week highlights the extent of the rotation away from defensive assets and towards certain underpriced cyclicals.

Key events to watch this week. As the US Fed prepares to raise interest rates it will be ultra-sensitive to the payroll numbers out this week. A strong reading could consolidate the case for a rate increase and drive the US dollar higher, which could normally weigh on commodity priced in US dollars.

Video Presentation

Nitesh Shah, Research Analyst at ETF Securities provides an analysis of last week’s performance, flow and trading activity in commodity exchange traded products and a look at the week ahead.

For more information contact

ETF Securities Research team
ETF Securities (UK) Limited
T +44 (0) 207 448 4336
E info@etfsecurities.com

Important Information

General

This communication has been provided by ETF Securities (UK) Limited (”ETFS UK”) which is authorised and regulated by the United Kingdom Financial Conduct Authority.

This is a strictly privileged and confidential communication between ETFS UK and its selected client. This communication contains information addressed only to a specific individual and is not intended for distribution to, or use by, any person other than the named addressee. This communication (i) is provided for informational purposes only, (ii) should not be construed in any manner as any solicitation or offer to buy or sell any securities or any related financial instruments, and (iii) should not be construed in any manner as a public offer of any securities or any related financial instruments. If you are not the named addressee, you should not disseminate, distribute or copy this communication. Please notify the sender immediately if you have mistakenly received this communication. When being made within Italy, this communication is for the exclusive use of the ”qualified investors” and its circulation among the public is prohibited.

This document is not, and under no circumstances is to be construed as, an advertisement or any other step in furtherance of a public offering of shares in the United States or any province or territory thereof. Neither this document nor any copy hereof should be taken, transmitted or distributed (directly or indirectly) into the United States.

This document may contain independent market commentary prepared by ETFS UK based on publicly available information. ETFS UK does not warrant or guarantee the accuracy or correctness of any information contained herein and any opinions related to product or market activity may change. Any third party data providers used to source the information in this communication make no warranties or representation of any kind relating to such data.

Any historical performance included in this document may be based on back testing. Back tested performance is purely hypothetical and is provided in this document solely for informational purposes. Back tested data does not represent actual performance and should not be interpreted as an indication of actual or future performance.

Historical performance is not an indication of or a guide to future performance.

The information contained in this communication is neither an offer for sale nor a solicitation of an offer to buy securities. This communication should not be used as the basis for any investment decision.

ETFS UK is required by the United Kingdom Financial Conduct Authority (”FCA”) to clarify that it is not acting for you in any way in relation to the investment or investment activity to which this communication relates. In particular, ETFS UK will not provide any investment services to you and or advise you on the merits of, or make any recommendation to you in relation to, the terms of any transaction. No representative of ETFS UK is authorised to behave in any way which would lead you to believe otherwise. ETFS UK is not, therefore, responsible for providing you with the protections afforded to its clients and you should seek your own independent legal, investment and tax or other advice as you see fit.

Risk Warnings

Any products referenced in this document are generally aimed at sophisticated, professional and institutional investors. Any decision to invest should be based on the information contained in the prospectus (and any supplements thereto) of the relevant product issue. The price of any securities may go up or down and an investor may not get back the amount invested. Securities may valued in currencies other than those in which there are priced and will be affected by exchange rate movements. Investments in the securities which provide a short and/or leveraged exposure are only suitable for sophisticated, professional and institutional investors who understand leveraged and compounded daily returns and are willing to magnify potential losses by comparison to investments which do not incorporate these strategies. Over periods of greater than one day, investments with a short and/or leveraged exposure do not necessarily provide investors with a return equivalent to a return from the unleveraged long or unleveraged short investments multiplied by the relevant leverage factor. Investors should refer to the section entitled ”Risk Factors” in the relevant prospectus for further details of these and other risks associated with an investment in any securities referenced in this communication.

If you have any questions please contact ETFS UK at +44 20 7448 4330 or info@etfsecurities.com for more information.