Etikett: COPA

Oil Bargain Hunting Continues as Investors Shun Gold on Greek Deal

Oil Bargain Hunting Continues as Investors Shun Gold on Greek DealOil Bargain Hunting Continues as Investors Shun Gold on Greek Deal

Oil Bargain Hunting Continues as Investors Shun Gold on Greek Deal- ETF Securities Commodity ETP Weekly

•    Bargain hunting drives inflows into long WTI oil ETPs to highest in 16 weeks, totaling US$44mn.

•    Investors see value in ’industrial’ precious metals, continuing to shun gold.

•    ETFS Wheat (WEAT) outflows hit six-month high.

•    Long copper and nickel ETPs buck the trend of outflows from industrial metals sector.

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Cyclical assets are benefiting in early trading on the newly agreed Greek deal, while defensive assets are currently out of favour. Gold in particular has lost ground as positive sentiment grips investors, but there remain hurdles for the Greek government to implement and adhere to the arrangements. Commodity markets are likely to begin to trade in line with fundamentals, now that the uncertainty surrounding the Eurozone is beginning to fade. However, the relative stability in sentiment will need to be sustained. Chinese economic data (GDP, industrial production and retail sales) will be the main focus for investors this week, after better-than-expected trade data showed that commodity demand remains solid.

Bargain hunting drives inflows into long WTI oil ETPs to highest in 16 weeks, totaling US$44mn. The second consecutive weekly build in crude stockpiles, alongside a rising rig count, indicated that supply is likely to remain abundant, with prices still not low enough to dissuade production in the US. The issue of ‘massive oversupply’ has been reiterated by the International Energy Agency, which noted that there is further potential price falls in the pipeline. Meanwhile, OPEC supply is another concern, and if Iranian nuclear negotiations are successful, the 3-year high production levels could rise further. Indeed, while bargain hunters are looking at current prices as attractive entry points, some near-term softness could result until excess supply can be absorbed by rising demand.

Investors see value in ‘industrial’ precious metals, continuing to shun gold. The sentiment driven sell-off in precious metals has begun to draw investors, with silver and platinum the most favoured. Investors are looking at the depressed price levels of precious metals with significant industrial demand as attractively valued, as the global economic recovery continues, despite negative sentiment currently pervading markets. Long silver ETPs recorded the fourth consecutive week of inflows, with US$18mn received over the period. Meanwhile, platinum posted the third consecutive week of inflows, totaling US$17mn over the period.

ETFS Wheat (WEAT) outflows hit six-month high. Wheat prices have pared recent strong gains, and investors have reduced positions for the second consecutive week. WEAT outflows totaled US$a4.3mn, alongside the recent USDA report showing rising US output this year. Soybean output was also revised higher but the report showed declining corn production.

Long copper and nickel ETPs buck the trend of outflows from industrial metals sector. ETFS Long Copper (COPA) recorded the largest inflow in 10 weeks, totaling US$8.6mn. Meanwhile ETFS Nickel (NICK) has recorded the fourth successive weekly inflows, with deposits of US$15.7mn over the period. Although negative Chinese sentiment coming from sharemarket uncertainty has had an adverse impact on industrial metals prices, we believe that once fundamentals reassert, prices will be broadly supported.

Key events to watch this week. Once concern over Greece’s situation has subsided, focus will move back to economic fundamentals and a raft of Chinese data including GDP, industrial production and retail sales will be key to price direction for commodity markets. The ECB meeting will be a contributor, mainly for the impact that a potentially stronger US Dollar could have on commodities, particularly the precious metals sector.

For more information contact

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

Important Information

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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.

Investor Hedging Favours Gold

Investor Hedging Favours Gold

ETF Securities Commodity ETP Weekly Investor Hedging Favours Gold

Gold ETPs see three consecutive weeks of inflows.

Third consecutive week of inflows for industrial metals, led by ETFS Copper (COPA).

ETFS Wheat (WEAT) sees fifth consecutive week of inflows.

Profit-taking in oil ETPs for the eighth consecutive week.

Download the complete report (.pdf)

Although Greece managed to scrape together its €750mn payment to the IMF, the fact it had to do so by tapping into its own IMF reserves account was a cause for concern. With its cash wearing so thin, the risk of an accident now is very high. Weaker-than-expected German Q1 GDP data, a downgrade of UK GDP forecast from the Bank of England and a string of poor Chinese data point to monetary easing from the world’s major central banks continuing for the foreseeable future. Gold responded decisively, jumping 3.2% on the week, while silver riding its coat-tail gained 6.4%.

Gold ETPs see three consecutive weeks of inflows. The recent rally in gold prices and rising market anxiety about Greece and European growth rates has driven heightened interest in gold. Last week we saw US$11.1mn of inflows into gold ETPs, adding to the US$62.3mn of cumulative inflows from the previous two weeks. World Gold Council data released last week showed only modest decline in gold demand in Q1 2015 relative to same period last year, with investment demand posting gains led by the ETP inflows.

Third consecutive week of inflows for industrial metals, led by ETFS Copper (COPA). COPA received US$4.8mn after the copper price has risen 7.6% in the past month as supply forecasts were revised down. The International Copper Study Group has for the past few years forecast supply surplus, when in reality the market has ended the year in a supply deficit. ICSG tend not to factor in the disruption to output from miner strikes, accidents and port closures. They have forecast a surplus in 2015 once again, but the recent flooding in Chile has already been a setback to global output.

ETFS Wheat (WEAT) sees fifth consecutive week of inflows. After wheat prices hit a five-year low two weeks ago, they bounced 7.7% last week. Investors have been steady building positions in wheat ETPs, bargain hunting as underlying prices remain depressed. Last week WEAT received US$3.7mn. With US farmers expecting to plant less of the grain this year, we expect supply to tighten. The near-perfect weather conditions we saw last year are unlikely to be repeated this year. In fact the Australian Bureau of Meteorology last week declared that we are currently in an El Niño weather event, which could be quite substantial in strength. El Niño weather events typically make countries like Australia and India more warm and dry than usual, potentially hurting their wheat crops.

Profit-taking in oil ETPs for the eighth consecutive week. Both Brent and WTI benchmarks rose 1.6% last week. Unsurprisingly, some ETP investors chose to take profit, seeing US$8.6mn of outflows. With OPEC announcing last week that it increased daily production by 18,000 barrel per day in April and the International Energy Agency claiming that OPEC’s battle for market share is ‘only just beginning’ the prospects for a correction in the 40% price rally since March seem high. Meanwhile, investors also took profit on a US natural gas ETPs after a 10% price rally last week. Natural gas surged following expectations of warmer US weather that would boost demand for the commodity to generate power for air-conditioning.

Key events to watch this week. US, Euro area and UK inflation numbers will be closely viewed to see if deflationary trends are abating. Continued price weakness should keep a central bank easing bias, which has been historically positive for gold.

 

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.

Precious Metals in Favour as Equity Volatility Rises

Precious Metals in Favour as Equity Volatility Rises

ETF Securities Commodity ETP Weekly Precious Metals in Favour as Equity Volatility Rises

Gold leads precious metal inflows to 11 week highs of US$49m.

ETFS Coffee (COFF) had its second highest weekly flow since inception in 2008.

ETFS Aluminium (ALUM) receives highest inflows in six months.

Profit-taking in oil ETPs for the seventh consecutive week.

Download the complete report (.pdf)

The outlook for cyclical commodities has improved after China’s central bank cut interest rates for the third time in six months in order to stem the slowdown in economic activity. However, risk appetite could be limited, with sharp moves in both directions for benchmark equities keeping investors on edge. As a result, gold appears to have come back into favour as a defensive hedge against declining sentiment. Gold appears set to benefit again this week, with Greek debt negotiations likely to prevent any significant upswing in investor risk appetite.

Gold leads precious metal inflows to 11 week highs of US$49m. Investors looked to physical gold exposures last week to offset the rough patch experienced by global equity markets as rising volatility saw most global benchmarks post sharp declines. ETFS physical gold ETPs received the largest inflows in 12 weeks, totaling over US$38mn. Alongside gold inflows, silver received the largest inflows in four weeks, totaling over US$4mn, despite a moderation in prices.

ETFS Coffee (COFF) had its second highest weekly flow since inception in 2008. The Colombian Coffee Growers Federation reported that the country’s coffee production for April grew 11.06% year-on-year, prompting a price decline last week, but investors saw this as a better entry point to establish long positions. However, Colombia only produces 11% of global Arabica output. Brazil who produces 45% of global output, has had significant drought damage to its coffee bushes in 2014 threatening the yield in 2015. Added to that, a firmer Brazilian Real removes a catalyst for stock-offloading by Brazilian farmers. We believe that coffee prices could benefit from a tightening in supply from Brazil. Elsewhere in the agricultural sector, long wheat ETPs have seen the fifth consecutive week of inflows, totaling nearly US$27mn. Lower crop planting intentions by US farmers this season compared to last have given investors greater optimism of a run down in elevated inventory levels.

ETFS Aluminium (ALUM) receives highest inflows in six months. ALUM received US$72mn of inflows last week, as confidence regarding the outlook for Chinese growth gains momentum. Aluminium prices have been in decline as the market has been abundantly supplied. However, Chinese imports increased by over 30% in April from a year earlier. Meanwhile, the solid gains in recent weeks experienced by copper price has seen investors book profits, with withdrawals from ETFS Copper (COPA) at the highest levels in seven months, totaling US$40mn.

Profit-taking in oil ETPs for the seventh consecutive week. Oil prices posted declines last week, despite US stockpiles dropping for the first time in x months. After rising on expectations of prices declined as the EIA revealed a drop in inventory levels. Certainly recent rally appears stretched given the fundamentals, as supply remains abundant, and not just in the US. OPEC continues to produce more oil despite budgetary problems, but if prices remain at current levels, excess US production is not expected to be under any pressure.

Key events to watch this week. Eurozone Q1 GDP will be the key event this week in order to determine whether the ECB’s stimulus is having an impact on the real economy, and whether investors are justified increasing gold holdings. Greek debt negotiations will also have a near term impact on investor sentiment.

Video Presentation

Martin Arnold, 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 GDP in Focus After Rare Cut

China GDP in Focus After Rare Cut

ETF Securities Commodity ETP Weekly China GDP in Focus After Rare Cut

Industrial metals see fifth consecutive week of inflows.

Silver price drops back to attractive level, prompting inflows as gold sees more outflows.

Long WTI ETPs see largest outflows since 2010, ahead of US weekly inventory data.

Download the complete report (.pdf)

China’s latest stimulus – cutting its repo rate – has helped support industrial metals and a solid GDP result this week will give more impetus to commodity markets. Chinese commodity exports rebounded in March in another sign of a stabilization in demand and going into a strong seasonal period, cyclical commodities like industrial metals, should be well supported. Defensive commodities like gold will be in the spotlight this week, as investors look ahead to Eurozone CPI and the US retail sales data releases to gauge the pace of policy divergence in 2015. Eurozone CPI releases will be key for this week’s ECB meeting discussions.

Industrial metals see fifth consecutive week of inflows. Value investors appear to be wading back into the industrial metals space, with inflows totaling US$85mn over the past five weeks. Investors are becoming more optimistic about the outlook for the Chinese economy following its latest cut in interest rates in order to support activity. ETFS Copper (COPA) has been the main beneficiary, receiving around a third of total inflows over the past month, totaling US$28mn. Chinese imports of unwrought copper jumped by over 45% in March from February, in an indication of the tightening underlying market. While down around 2% on a year ago, Q2 is strong from a seasonal perspective and imports could continue to strengthen.

Silver price drops back to attractive level, prompting inflows as gold sees more outflows. ETFS Physical Silver (PHAG) experienced the second consecutive weekly inflows, totaling US$13mn over the period. The inflows are the largest biweekly inflows in two months and come as silver dipped to the lowest level in three weeks. With the link between silver and gold remaining strong, any further increase in volatility should support prices. While we believe that a US$15-16/oz price level is a buying opportunity, the market remains plagued by years of oversupply. Nonetheless, investors appear to be seeing silver from a strong relative value perspective and if inflation expectations in the Eurozone continue to move lower this week, both gold and silver could be key beneficiaries.

Long WTI ETPs see largest outflows since 2010, ahead of US weekly inventory data. A strong rally in crude followed the announcement of price hikes from Saudi Arabia to its Asian clients in addition to a lack of clarity over the potential ramp up in production from Iran following a potential nuclear deal being agreed. Investors took the opportunity to take profit, with crude ETPs withdrawals totaling US$73mn last week. In contrast, net long positions in WTI futures reached the highest level since August 2014. With US crude production continuing to defy depressed prices – the EIA’s weekly report showed the build in inventories last week was nearly three times larger than expected, at nearly 11mn barrels – near term downside risk remains elevated.

Key events to watch this week. Commodity investors will be closely watching the GDP release from China to determine whether the slowdown is more pronounced than expected. We feel that stimulus can support activity so growth remains resilient around the 7% level in 2015. Retail sales will be the next signpost to gauge whether the US economy is strong enough to support the beginning of policy tightening this year. Ahead of the ECB meeting, Eurozone inflation readings will also be critical for defensive commodities like gold and silver.

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.

Cyclicals Back in Favour as US Dollar Softens

Cyclicals Back in Favour as US Dollar Softens

ETF Securities Commodity ETP Weekly Cyclicals Back in Favour as US Dollar Softens

Long oil ETPs record the largest inflows in over two months, as current prices are deemed unsustainable.

Copper back in favour as production stops at Grasberg.

Gold ETPs suffer the 4th consecutive week of outflows.

Download the complete report (.pdf)

The correction in the US Dollar following the March FOMC meeting brought some relief to commodity prices last week. Oil and copper were once again favoured by investors, while gold continued to see outflows. Going forward, we expect demand for cyclical commodities to continue to benefit from the stimulus-driven cyclical rebound, while gold is likely to continue to feel the weight of rising interest rates in the US.

Long oil ETPs record the largest inflows in over two months, as current prices are deemed unsustainable. Total inflows into long oil products reached US$146.5mn last week, with WTI accounting for US$127.3mn. The price of WTI fell below US$45/bbl last week, the lowest level in 6 years, as US crude stockpiles soared for a tenth week, while output continued to rise. Meanwhile, the spread between Brent and WTI continue to widen, as US crude oil stocks have increased by over 70 million barrels since the beginning of 2015, putting storage facilities under pressure. We expect WTI and Brent to return to trade at around US$55/bbl and aUS$65/bbl by year end, as the massive decline in drilling activity in the US translates into substantial output cuts.

Copper back in favour as production stops at Grasberg. ETFS Copper (COPA) recorded US$11.7mn of inflows last week, the largest in 15 weeks, after operations at Freeport’s Grasberg mine, the world’s second-largest copper producer, were suspended for 5 days due to a labour dispute. This is not the only production disruption in the copper market since the beginning of the year. Last month, BHP Billiton reported a 60,000 tonnes reduction in copper production from its Olympic Dam mine in Australia due to problems at its mill. With the copper market having been in a deficit for the past 3 years, any unplanned supply outages have the potential to send prices higher.

Gold ETPs suffer the 4th consecutive week of outflows. Despite a partial recovery in price, gold ETPs continued to see outflows last week as investors favored cyclical assets once again. The correction in the US Dollar following the March FOMC meeting last week brought some relief to commodity prices that had been severely hit by the strength in the US Dollar. Although the Federal Reserve is no longer indicating that it will be ‘patient’ in raising interest rates, beyond the bullish jobs data it has relatively little ammunition to pull the trigger on rate hikes. The Fed is likely to raise rates more slowly than the market currently expects, leading to a short-term US Dollar pull-back. Gold is likely to continue to feel the weight of rising interest rates in the US. However, currently the price of gold over-estimates the pace of that tightening, and gold can offer a relatively cheap hedge to some of the tail risks of policy mistakes that may occur as the rise of anti-establishment political parties in Europe threatens to challenge the status quo.

Key events to watch this week. A number of manufacturing PMIs for Japan, China, the US and the Eurozone will be released this week and will help investors assess the strength of those economies. CPI releases for the US and the UK will also be monitored for any indication that higher rates may be warranted.

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.