Etikett: Aluminium

China and strong USD fail to deter commodity bargain-hunters

China and strong USD fail to deter commodity bargain-huntersChina 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.

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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.

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Oil remains in focus on falling US inventories

Oil remains in focus on falling US inventories

Commodity ETP Weekly Oil remains in focus on falling US inventories

Highlights

Investors favour WTI over Brent as US inventories unexpectedly drop.

Gold and silver ETPs suffer US$77mn of outflows on profit taking.

Natural gas price correction drive inflows to natural gas ETPs to 34-mth highs as winter season approaches.

Profit taking prompts 28-mth high outflows from wheat ETPs.

ETFS Aluminium (ALUM) outflows hit 9-week high on price weakness.

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Investors are becoming increasingly optimistic about oil outlook, with a fall in US stockpiles prompting the 10th consecutive weekly inflow into WTI ETPs. While prices are unlikely to recover sharply in the short-term unless output falls, the ongoing US economic recovery is likely to support demand for distillates.

Investors favour WTI over Brent as US inventories unexpectedly drop. While long Brent ETPs suffered US$82mn of outflows last week, long WTI crude ETPs recorded US$46mn of inflows. Both benchmarks’ prices dropped below US$70/bbl after OPEC’s decision not to cut production for the time being. While the IEA expects 82% of crude oil and condensates production from the United States is still profitable at a price of US$60/bbl or lower, if prices remain persistently low production will likely be reduced by higher cost producers. Although price weakness is likely to continue through the first half of 2015, continued growth from the US and China, combined with a reduction in oil supply, will eventually bring the oil market back to balance in our view with prices returning to trade around the US$90/bbl level.

Gold and silver ETPs suffer US$77mn of outflows on profit taking. Gold has risen almost 6% from the lows experienced after the Swiss gold referendum last week, while silver saw gains for over 15% from its nadir of US$14.08oz in 2014. We believe silver will continue to outperform gold in 2015, as the recovery in China and the US gains momentum, prompting a pick-up in industrial demand for silver.

Natural gas price correction drive inflows to natural gas ETPs to 34-mth highs as winter season approaches. Henry Hub natural gas prices fell by over 16% last week on mild weather, prompting US$30mn of inflows into long and leveraged natural gas ETPs. We expect prices to remain pressured in the short term by both weather forecasts of above average temperatures and abundant supply. However, the gathering momentum of the US economy and increased usage of natural gas in industry and electricity generation will create a supportive price environment in 2015.

Profit taking prompts 28-mth high outflows from wheat ETPs. The wheat price jumped 6.7% on unusually cold weather in the US in recent weeks, as frost might pose a threat to the newly seeded winter crop. Concerns over faltering Russian exports also contributed to buoy wheat prices last week. Russia announced it will consider introducing a floating tariff on grain exports to protect domestic supply should cold weather drastically reduce production. Outflows from long and leveraged wheat ETPs totalled US$20.3mn.

ETFS Aluminium (ALUM) outflows hit 9-week high on price weakness. Aluminium price hit a 5-year low last week, prompting US$52.8mn of outflows despite recent figures from the World Bureau of Metal Statistics showing a deficit in the global aluminium market in the first 9 months of the year. Overproduction in China is likely to continue to weigh on the aluminium price in the medium term. However, Norsk Hydro, one of aluminium’s biggest producers, expects prices to recover in 2015 on the back of tighter supply and strong demand from the automotive sector. At the same time, ETFS Copper (COPA) recorded the largest inflows since August, totalling US$13.4mn, on expected production cuts. Codelco, the world’s largest copper miner, recently announced it will cut production by 5% in 2015 in response to falling prices.

Key events to watch this week. This week will be dominated by China’s economic data, with aggregate financing, retail sales and industrial production all due to be released. China’s stock market surged last week as stimulus from the PBoC and the government is starting to produce its effects on the real economy.

Video Presentation

 

Simona Gambarini, 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.

Cyclical Assets In Focus

Cyclical Assets In Focus

ETFS Multi-Asset Weekly A Turbulent Week for Investors Cyclical Assets In Focus

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Highlights

Industrial metals staged a modest recovery after China posts upside surprise.
Global equities advance.
USD and CAD to outperform

 

 

 

 

Cyclical assets were back in focus last week, with industrial metals and global equities seeing modest gains. Better-than-expected Chinese Q3 GDP and industrial production data lifted investor sentiment and contributed to the advance. The FOMC meeting and US Q3 GDP growth data will likely be the focus for global markets this week, with industrial metals and US equities likely to benefit from improving growth in the country and the US Dollar likely to be buoyed by rising expectations for tighter Fed policy in 2015.

Commodities

Industrial metals staged a modest recovery after China posts upside surprise. Aluminium, palladium and lead all posted gains last week, rising by 4.1%, 4.0% and 2.9% respectively, as China’s Q3 GDP and industrial production surprised on the upside. Investors are starting to realise that the recent correction has been excessive and cyclical commodities like industrial metals are well positioned to benefit from robust activity in China and the US. Meanwhile, after rising over 70% since the beginning of the year, Arabica coffee prices slumped 11% last week on rainfall prospects in Brazil. Drought and irregular rain in Brazil, the world’s top producer, have hurt the prospect for 2015 crop. However, with rains resuming the flowering process has started for the 2015 crop, but analysts are divided in their opinion as to the extent the earlier disruptions will cause irrevocable damage to the crop.

 

Equities

Global equities advance. The FTSE MIB, the DAX, and the FTSE100 rallied strongly last week, after Chinese economic growth data boosted optimism over the global economic outlook. The rally however might be short-lived after 24 European banks failed the European Banking Authority (EBA) stress tests over the weekend. The Russell 2000 also gained last week, rising 2.8%, as US stock earnings beat expectations. With Q3 US GDP growth figures coming out on Thursday and likely confirming the steady pace of expansion of the US economy, US equities should continue to benefit. Meanwhile, continued weakness in the gold price weighed on the DAXglobal Gold Miners Index last week, erasing all the gains so far accumulated during the year. We anticipate this to be temporary and for gold miners to resume their growth as valuations remain well below historical levels.

Currencies

USD and CAD to outperform. Central Banks will again dominate currency landscape this week, with the US Federal Reserve, the Bank of Japan and the Reserve Bank of New Zealand all holding policy meetings. While most central banks have been trying to talk down their currencies in recent months, the US Fed and the Bank of Canada have been the exception. We expect this week’s FOMC meeting to be the catalyst for a stronger USD. The Fed will likely cease its bond buying this month, in line with previous guidance. Its forward guidance will be the main focus and any changes to the language will prompt a swift reaction for USD. We remain bullish on the outlook for the USD and feel that this week’s GDP release will again confirm that the recovery is on track in the US. The Canadian dollar (CAD) should be one of the best performers in coming months, with an improving domestic economy supporting rate differentials and a stabilisation in oil prices. CAD is significantly tied to oils’ fortunes, and this source of downward pressure will be gradually removed.

For more information contact:

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

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This communication has been issued and approved for the purpose of section 21 of the Financial Services and Markets Act 2000 by ETF Securities (UK) Limited (”ETFS UK”) which is authorised and regulated by the United Kingdom Financial Conduct Authority (”FCA”).

Investments may go up or down in value and you may lose some or all of the amount invested.  Past performance is not necessarily a guide to future performance. You should consult an independent investment adviser prior to making any investment in order to determine its suitability to your circumstances.

The information contained in this communication is for your general information only and 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. Historical performance is not an indication of future performance and any investments may go down in value.

This communication may contain independent market commentary prepared by ETFS UK based on publicly available information. Although ETFS UK endeavours to ensure the accuracy of the content in this communication, ETFS UK does not warrant or guarantee its accuracy or correctness. 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. Where ETFS UK has expressed its own opinions related to product or market activity, these views may change. Neither ETFS UK, nor any affiliate, nor any of their respective, officers, directors, partners, or employees accepts any liability whatsoever for any direct or consequential loss arising from any use of this publication or its contents.

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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 or securities 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.

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Oil and Gold ETPs Remain in Focus Despite Easing Geopolitical Tensions

Oil and Gold ETPs Remain in Focus Despite Easing Geopolitical Tensions

ETF Securities – Oil and Gold ETPs Remain in Focus Despite Easing Geopolitical Tensions

Geopolitical risks remained a focus for investors last week, with gold and oil ETPs seeing the 8th consecutive week of inflows. Russia and Ukraine progressed towards the termination of the conflict by agreeing on a permanent ceasefire, but fighting resumed on Sunday, threatening to end the truce. While the geopolitical situation appears to be improving, demand for defensive assets is likely to remain strong as uncertainty surrounding the relationship between Ukraine and Russia lingers. Meanwhile, the ECB surprised the market by cutting interest rates by 10bps and announcing a programme of purchasing asset backed securities last week, in an attempt to reinvigorate economic activity.

 

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Highlights

Oil and gold ETPs continue to see inflows despite easing geopolitical tensions.

ETFS Daily Leveraged Silver (LSIL) sees the highest inflows since June as price drops to US$19oz.

Profit taking drives US$18.1mn of outflows from ETFS Aluminium (ALUM)

Oil and gold ETPs continue to see inflows despite easing geopolitical tensions. While it appears the easing in geopolitical tension surrounding the Russia/Ukraine standoff has weighed on precious metal and oil prices, investors continued to build hedges into their portfolios, with US$21.6mn added to long gold and oil ETPs last week. Gold ETPs recorded their 8th consecutive weekly inflows, totalling US$3.3mn last week. While the geopolitical situation appears to be improving, demand for defensive assets is likely to remain strong as uncertainty surrounding the relationship between Ukraine and Russia lingers. Moreover, we believe the continued recovery of US and China economies will also support demand for oil during the second half of 2014 with OPEC likely to reduce supply if demand and prices remain depressed. With speculative net long positions in oil futures likely to recover in the near term, we view current oil price levels as a good entry point and target Brent and WTI at US$110/bbl and US$105/bbl respectively.

ETFS Daily Leveraged Silver (LSIL) sees the highest inflows since June as price drops to US$19oz. Inflows into LSIL totalled US$6.9mn last week. The silver price has been trending lower for the past 7 weeks and it is now getting close to attractive levels, in our opinion. While inventories remain elevated, signalling lacklustre industrial demand, silver price is trading closer to its marginal cost of production that currently stands at US$15oz. The Silver Institute expects demand for the metal to grow at around 5% per annum over the next two years thanks to a sharp turnaround in the global photovoltaic industry, led by China. In the medium term we expect the trend of destocking and price appreciation to resume as the global recovery gains pace.

Profit taking drives US$18.1mn of outflows from ETFS Aluminium (ALUM). Aluminium price is up 19% since the beginning of the year as production cuts have substantially improved the fundamentals of a market which has been plagued by oversupply for years. At the same time, copper ETPs saw US$68mn of outflows last week. Copper has lagged other industrial metals like aluminium, nickel and zinc this year, on aggressive production expectations and fears of a slowdown in China. However, we believe fears of copper oversupply are overblown and that copper remains attractive at current price levels given the underlying fundamentals.

Key events to watch this week. This week is relatively light in terms of economic releases, with industrial production figures for the UK, Japan, the Eurozone and India dominating the news flow. China’s new yuan loans, CPI and exports will also be monitored as investors try to assess the effectiveness of government policies on the real economy

Download the complete report (.pdf)

Video Presentation
Simona Gambarini, 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.

Silver and Copper see Strong Inflows as ECB Easing Boosts Risk Appetite

Silver and Copper see Strong Inflows as ECB Easing Boosts Risk Appetite

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The European Central Bank’s strong policy moves announced last week to spur growth and strong US employment data added to investor confidence in the global macro outlook, boosting interest in commodities broadly and more cyclical metals in particular. The gold price also rose on news of aggressive monetary measures taken by the ECB, as the metal often trades as an alternative hard currency.

Long silver ETPs see highest inflows in 10 weeks. Inflows of US$20.9mn last week show that investor enthusiasm for the metal that usually trades in gold’s shadow is growing. With global economic growth rising, prospects for the metal, used in many industrial applications, are improving. Silver is likely to post another supply deficit this year, following last year’s trend, further tightening the market. Despite the US imposing higher tariffs against Chinese solar panel imports last week, its new climate change policy announced last week is likely to lift the demand for photovoltaics in general. Solar panels are the fastest segment of demand growth for silver fabrication, with a compound annual growth rate of 20% over the past decade and are now as significant as photography in terms of sources of silver demand.

ETFS Copper (COPA) sees $18.1mn of inflows, the highest in a month. Investors appeared to view the drop in the copper price to a month low as a good buying opportunity. The price has been weighed on by an investigation into warehousing in China’s Qingdao port that investors worry could unwind financing deals using the metal as collateral. In our view, underlying real demand for the metal in China remains robust. We expect that as negative sentiment and speculative activity subsides, investors will again focus on tightening supply-demand fundamentals and continue to target a copper price of around US$7,500/tonne.

Gold ETPs see the biggest outflows since September 2013 as investors continue to rotate into more cyclical assets. Although the gold price rose on Thursday following the ECB’s decision to cut interest rates and press on with other monetary easing measures, the gold price ended the week lower as markets focused on the potential for further US dollar strength. In our view, however, with positioning already heavily negative gold, the gold price now trading near its marginal cost of production and developed market equity markets looking heavily stretched, we view the gold price as these levels as relatively cheap insurance against the possibility the current consensus positive macro views are wrong.

Profit taking drives US$15.8mn out of ETFS Aluminium (ALUM). Marking the largest outflow since November 2013. Aluminium has been the best performing industrial metal this month, gaining 4.7% as China tries to address oversupply in domestic production.

ETFS Physical Palladium (PHPD) saw its largest outflow since July 2013. Taking profit on a 1.1% rise in price, palladium investors sold US$12.2mn into the rally last week. With courts having thrown out the AMCU union’s request to stop the miners communicating directly with their employees in South Africa, an end to the prolonged strike does not appear to be getting any closer.

Key events to watch this week. China’s money supply, lending and production data will be in focus as investors watch to see the impact the government’s recent stimulus measures are having on the world’s second largest economy.

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