Brexit – Is the end of March still likely?

Brexit - Is the end of March still likely? ETF SecuritiesBrexit – Is the end of March still likely?

Weekly Investment Insights – Brexit – Is the end of March still likely?

Highlights

  • May’s second defeat in the Lords has added to uncertainty surrounding the  triggering of Article 50, pressuring the GBP.
  • In all likelihood the “Brexit Bill” should gain approval during the next week setting the stage for an official announcement.
  • The risk comes from a rebellion in the Commons that could see government credibility damaged or even a snap election

May suffers second defeat

Theresa May’s EU Notification of Withdrawal Bill (the Bill) suffered its second setback in as many weeks on Tuesday, as the House of Lords voted for the inclusion of a yet another amendment to the landmark legislation. While the first centred on guaranteeing the rights of approximately 3 million EU citizens working in the UK, the second change would allow Parliament to have a direct say on the final terms of a future Brexit deal. In the meantime, the GBP has fallen to seven week lows against both the US Dollar and the Euro (see Figure 1) as investors continue to express concern over the imminent (in theory) trigger of Article 50. The question now is what the timeline will be of May actually triggering Article 50 given recent events and whether a March-end deadline is still realistic.

Figure 1: Uncertainty pushes GBP lower

(click to enlarge)

Next step and risks

At the start of next week (March 13th) the House of Commons is expected to vote on the amendments put forward. The most likely outcome is that with the government’s 17 member working majority the amendments will be overturned, sending the Bill back to the House of Lords. The House of Lords can vote for additional amendments (different from before) and begin a process known as “ping pong” with the lower house. Political pundits feel this is unlikely though as the Lords do not want to be viewed as frustrating the referendum result and in turn the will of the British public. Therefore, in the earliest case we could see May trigger the Article as early as next week.

However there are risks involved. Pro-EU backbenchers in the Conservative Party could coordinate to prevent amendments being implemented, prolonging the process further and creating greater uncertainty. This could see the Sterling move lower as it is clear that the market needs clarity over future proceedings. In the aftermath of the second vote in the Lord’s, the government took the swift steps of removing the former Conservative deputy prime minister Lord Heseltine from his post as government advisor, sending a signal that rebellion will not be tolerated.

Potential Dates

In any case, should the Lord’s approve the Bill in the early part of next week May will have to act tactfully in determining a trigger date. On the 15th March is the Dutch general election where controversial populist Geert Wilders is leading in the polls and then immediately after (17th-18th) is the Scottish National Party (SNP’s) spring conference where the increasingly  disillusioned political party could announce a second independence referendum. The key date to avoid is the EU Summit to be held on March 27th, which commemorates the 1957 signing of the Treaty of Rome. Should May overshadow this event with the UK’s formal notification of departure, could spark a hostile reaction, something that will likely be reflected in an uptick in the EUR/GBP currency pair.

Investors wishing to express the investment views outlined above may consider using the following ETF Securities ETPs:

Currency ETPs

GBP Base

ETFS Long EUR Short GBP (GBUR) ETFS Short EUR Long GBP (URGB) ETFS Long USD Short GBP (GBUS) ETFS Short USD Long GBP (USGB)

USD Base

ETFS Long GBP Short USD (LGBP) ETFS Short GBP Long USD (SGBP)

3x

ETFS 3x Long GBP Short EUR (EGB3) ETFS 3x Short GBP Long EUR (GBE3) ETFS 3x Long GBP Short USD (LGB3) ETFS 3x Short GBP Long USD (SGB3) ETFS 3x Long USD Short GBP (USP3) ETFS 3x Short USD Long GBP (PUS3) ETFS 3x Long EUR Short GBP (EUP3) ETFS 3x Short EUR Long GBP (SUP3)

5x

ETFS 5x Long GBP Short EUR (EGB5) ETFS 5x Short GBP Long EUR (GBE5)

Basket

ETFS Bullish GBP vs G10 Currency Basket Securities (LGBB) ETFS Bearish GBP vs G10 Currency Basket Securities (SGBB)

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Trump Uncertainty Could Be “Huge” for Gold

Trump Uncertainty Could Be “Huge” for Gold

Market Review – Trump Uncertainty Could Be “Huge” for Gold

Gold Market Commentary November 2016

Market Review

Our positive view on the long-term prospects for gold remain unchanged. The U.S. elections are over, and markets will likely take time to reflect the full impact of a Trump victory. Gold immediately rose above $1,300 per ounce yesterday on news of Trump’s win, but settled back to end the day at $1,278. Price volatility in the short run is not surprising.

Fed Comments on December Rate Hike Break Gold’s Upward Move

The strong price movements that followed the U.K. Brexit vote on June 23 had set gold on a new positive trend, breaking the downtrend that had been established during the 2013-2015 gold bear market. On October 4, however, gold fell $44 per ounce, a 3.4% drop for the day, and gold closed below $1,300 per ounce for the first time since June 24. As it had for most of the year, the downward pressure followed comments by some Federal Reserve (the “Fed”) members that were interpreted by the market as increasing the likelihood of a Fed interest rate hike occurring in December. In addition, and importantly, Chinese markets were closed the first week of October for the Golden Week holidays. With gold’s biggest buyer out on vacation, gold was left very vulnerable, which we believe emboldened short sellers. Gold closed as low as $1,251 per ounce on October 14 but bounced back modestly to end the month at $1,277.30 per ounce, down $38.45 or 2.9% for the month.

A Rate Increase Has Been Priced into Gold and U.S. Dollar

At the beginning of November, markets attached about a 78% probability to a December Fed rate hike, as implied by the federal funds futures markets. This probability stood at 59% at the end of September, despite U.S. macro data releases that were very mixed, as has been the case throughout the post-crisis recovery. There were certainly some positive economic surprises in October: PMI (Purchasing Managers’ Index) readings from both the ISM (Institute of Supply Management) and Markit Group in the manufacturing, non-manufacturing, and services sectors showed some expansion and an increase in August factory orders for U.S. goods.1

In contrast, however, weak data were reported for U.S. employment, the preliminary University of Michigan Consumer Sentiment Index,2 the Empire State Manufacturing Index,3 housing starts, and the U.S. Consumer Confidence Index.4 While 3Q gross domestic product (GDP) headline growth was above consensus, personal consumption missed expectations by a wide margin. By mid-October, regional Fed growth forecasts were being downgraded. The Federal Reserve Bank of New York’s 4Q 2016 GDP Nowcasting Report, for example, shows 1.4% growth as of October 20 versus 2% growth in late August. In this environment, a rate hike does not appear to us as the obvious next move by the Fed, but the market is pricing it in, and both gold and the U.S. dollar reflected this in October. While gold was down 3%, the U.S. Dollar Index (DXY)5 was up 3% during the month.

Demand for Gold Withstood Recent Selloff

Despite the drop in the gold price in October, demand for gold bullion-backed exchange traded products (ETPs) held firm. Inflows have no doubt slowed down compared to earlier in the year (0.4% increase in holdings in October compared to 12% and 6% increases in February and June respectively), but demand continued during the recent selloff. We believe this is positive since investments in gold bullion ETPs typically represent longer-term, strategic investment demand. In contrast, the latest Commitment of Traders report shows a significant decline in COMEX6 net long positions, which reached record levels this year. We think COMEX positioning reflects more speculative and shorter-term demand for gold, and the recent decline suggests perhaps some of those weaker players liquidated positions during the October selloff.

Gold stocks underperformed the metal, as expected when bullion prices fall. The NYSE Arca Gold Miners Index (GDMNTR)7 fell 7.3%, and the MVIS Global Junior Gold Miners Index (MVGDXJTR)8 dropped 8.8% during the month. This decline trimmed gains for the year to 79% for GDMNTR and 110% for MVGDXJTR as of October 31, while gold bullion gained 20.3% during the same year-to-date period.
Election Uncertainty and Asian Demand Should Support Gold

The gold price is on a slightly different track now compared to our previous expectations. A correction was not surprising, given gold’s outstanding performance this year. But we thought that the $1,300 level might hold and gold would continue on the new trend established this year, potentially exiting 2016 around the $1,400 level. Although our shorter-term outlook has been curbed by the recent price action and we now think that gold may not reach $1,400 in 2016, we believe strong seasonal demand out of Asia and continued uncertainty following the results of the U.S. presidential election could lend support to gold in the near term. In the first week of November, gold managed to rally back above $1,300. The Fed decided to keep rates unchanged at its November 2 Federal Open Market Committee (FOMC) meeting, but this was widely expected, so we estimate the positive move was most likely driven by market concern over the outcome of the U.S. elections. Market views quickly shifted, once again, and on November 8, Election Day in the U.S., gold closed at $1,277. Following Trump’s stunning victory, gold rose back above the $1,300 price level on the morning of November 9.

Trump Presidency May Increase Financial Risk

With the contentious presidential election finally over, we can now assess the impact that the Trump victory will have on the country and more importantly, how it potentially increases risk to the financial system.

Although Trump emerged successful in the election, there remains tremendous uncertainty surrounding his morals, temperament, and judgment. Internationally, high levels of trepidation around his foreign policies are not likely to subside quickly, and his anti-trade stance could damage economic growth. In our opinion, Trump’s aggressive immigration policy was no doubt one of the key drivers of his appeal but could lead to potential civil unrest, extreme costs, and logistical challenges once implemented. If Trump is able to implement some of what he promoted during the campaign trail, infrastructure spending could push the national debt to unsustainable levels and deficit spending should continue. While the risks of a Trump presidency are substantial, the potential for pro-growth tax and regulatory reforms may partially mitigate risks.

Independent of policy specifics, there exists a growing chance our newly elected president will likely preside over the next recession. After eight years of expansion, there are signs that the economy has entered the ”late cycle” phase. The Fed’s efforts to tighten policy could create a further drag on growth. A recession layered onto the existing risks we see in a Trump presidency, in our view, makes a systemic financial crisis more likely.

Higher Rates Not Always Negative for Gold

A Fed rate hike in December appears almost fully priced-in already. The common argument is that higher rates are negative for gold given that it is a non-yielding asset. Yet, following the first rate hike of the current tightening cycle in December 2015, gold has advanced more than 20% so far this year. In fact, Scotiabank analyzed the previous six tightening cycles since 1982 (when a suitable gold index became available) and it found that gold prices advanced in the year following the first rate increase in half of the cycles, whereas gold declined in the other half.

Scotiabank points out that the only other point at which the Fed raised rates in a low-inflation environment was in 1986 when rates were increased to help defend a sharply depreciating U.S. dollar. It was one of the rate-rising periods when gold performed well. This is shaping up to be a similar period demonstrated by gold’s already strong performance after the first rate increase in December 2015. The economic and financial backdrop of the current rate cycle is unlike any other in recent history, and we expect gold to continue to perform well. In our opinion, the stress that rising rates have the potential to place on the global economy and financial system are very bullish for gold.

Long-Term Outlook Remains Positive for Gold Bull Market

Our view on the long-term gold price is unchanged. We see the recent weakness as a consolidation phase within what we believe is the early stages of the next bull market for gold. We continue to believe dislocations created by the unconventional policies being implemented by central banks around the world are likely to increase global financial risks. We believe that investors will continue to be driven to gold as a safe haven given the further loss of confidence in central banks on a global scale and perhaps domestically, and the uncertainty following Trump’s presidential victory.9

Download Commentary PDF with Fund specific information and performance  

by Joe Foster, Portfolio Manager and Strategist

With more than 30 years of gold industry experience, Foster began his gold career as a boots on the ground geologist, evaluating mining exploration and development projects. Foster is Portfolio Manager and Strategist for the Gold and Precious Metals strategy.

1In the U.S., the federal funds rate is “the interest rate” at which depository institutions actively trade balances held at the Federal Reserve, called federal funds, with each other, usually overnight, on an uncollateralized basis. Institutions with surplus balances in their accounts lend those balances to institutions in need of larger balances. 2The correlation coefficient is a measure that determines the degree to which two variables’ movements are associated and will vary from -1.0 to 1.0. -1.0 indicates perfect negative correlation, and 1.0 indicates perfect positive correlation. 3U.S. Dollar Index (DXY) indicates the general international value of the U.S. dollar. The DXY does this by averaging the exchange rates between the U.S. dollar and six major world currencies: Euro, Japanese yen, Pound sterling, Canadian dollar, Swedish kroner, and Swiss franc. 4The ISM Manufacturing Index is an index based on surveys of more than 300 manufacturing firms by the Institute of Supply Management. The ISM Manufacturing Index monitors employment, production inventories, new orders and supplier deliveries. 5A survey of consumer confidence conducted by the University of Michigan. The Michigan Consumer Sentiment Index (MCSI) uses telephone surveys to gather information on consumer expectations regarding the overall economy. 6The U.S. consumer confidence index (CCI) is an indicator designed to measure consumer confidence, which is defined as the degree of optimism on the state of the economy that consumers are expressing through their activities of savings and spending. 7NYSE Arca Gold Miners Index (GDMNTR) is a modified market capitalization-weighted index comprised of publicly traded companies involved primarily in the mining for gold. 8MVIS Global Junior Gold Miners Index (MVGDXJTR) is a rules-based, modified market capitalization-weighted, float-adjusted index comprised of a global universe of publicly traded small-and medium-capitalization companies that generate at least 50% of their revenues from gold and/or silver mining, hold real property that has the potential to produce at least 50% of the company’s revenue from gold or silver mining when developed, or primarily invest in gold or silver.

Please note that the information herein represents the opinion of the author and these opinions may change at any time and from time to time.

Important Information For Foreign Investors

This document does not constitute an offering or invitation to invest or acquire financial instruments. The use of this material is for general information purposes.

Please note that Van Eck Securities Corporation offers actively managed and passively managed investment products that invest in the asset class(es) included in this material. Gold investments can be significantly affected by international economic, monetary and political developments. Gold equities may decline in value due to developments specific to the gold industry, and are subject to interest rate risk and market risk. Investments in foreign securities involve risks related to adverse political and economic developments unique to a country or a region, currency fluctuations or controls, and the possibility of arbitrary action by foreign governments, including the takeover of property without adequate compensation or imposition of prohibitive taxation.

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1U.S. Dollar Index (DXY) indicates the general international value of the U.S. dollar. The DXY does this by averaging the exchange rates between the U.S. dollar and six major world currencies: Euro, Japanese yen, Pound sterling, Canadian dollar, Swedish kroner, and Swiss franc. 2NYSE Arca Gold Miners Index (GDMNTR) is a modified market capitalization-weighted index comprised of publicly traded companies involved primarily in the mining for gold. 3MVIS Global Junior Gold Miners Index (MVGDXJTR) is a rules-based, modified market capitalization-weighted, float-adjusted index comprised of a global universe of publicly traded small- and medium-capitalization companies that generate at least 50% of their revenues from gold and/or silver mining, hold real property that has the potential to produce at least 50% of the company’s revenue from gold or silver mining when developed, or primarily invest in gold or silver. 4Fannie Mae (Federal National Mortgage Association); Freddie Mac (Federal Home Loan Mortgage Corporation)

Please note that the information herein represents the opinion of the author and these opinions may change at any time and from time to time. Not intended to be a forecast of future events, a guarantee of future results or investment advice. Historical performance is not indicative of future results; current data may differ from data quoted. Current market conditions may not continue. Non-VanEck proprietary information contained herein has been obtained from sources believed to be reliable, but not guaranteed. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission of VanEck. ©2016 VanEck.

Gold to rally if Fed doesn’t hike

Gold to rally if Fed doesn’t hike

ETF Securities Weekly Flows Analysis – Gold to rally if Fed doesn’t hike

  • The longer the Fed postpones its second rate hike, the greater the support for gold.
  • Silver ETPs benefit from strong ties to gold, with second consecutive weekly inflows.
  • Net inflows in long USD ETPs suggest investors wary of rate hike ahead of the next Fed meeting.

Download the complete report (.pdf)

Gold ETPs recorded net inflows of US$116mn following more disappointing US economic data. Although the Fed chairwoman said at the Jackson Hole Symposium that the case for a rate hike has strengthened recently, weaker-than-expected jobs and services sector data provided more reasons for the Fed to not increase interest rates at its meeting on September 20. Net speculative long positions in gold futures rebounded 13.2% last week, after reaching a 12-week low the previous week. At the same time, the probability for a rate hike in September fell from 42% following Yellen speech at the Jackson Hole to 28% last Thursday. However, Fed’s Rosengren warned last Friday on the rising risks of low interest rates on the US economy pushing the odds to 30% and weighing on the price of gold, down 1% on that day. We expect the price of gold to reach US$1,440/oz. by June 2017.

Silver continue to benefit from its safe haven property. Last week saw net inflows of US$16mn into silver ETPs for the second consecutive week, benefitting from the popularity of gold. Net speculative long positions in silver futures also rose for the second consecutive week last week, by 5.5% to 2.3 times above the 5-year average. Silver has had a stronger rally than gold year-to-date, up 40% compared to 26% for gold. Subsequently, the gold/silver ratio dropped 11% over the same period and now stands 11% above its historical average. This potentially indicates that silver catch-up as safe haven may be near the end with further upside potential likely to lie more on the demand for the metal’s industrial properties.

USD gained traction last week ahead of the next Fed meeting. Weaker-than-expected non-farm payroll enabled the USD to close in a positive territory the previous week, up 0.3%. However, the currency fell again last week by 0.5%, prompting net inflows into long USD short EUR ETPs ahead of the Fed meeting in September 20. This suggests that investors still expect a rate hike from the Fed this year, fuelled by Fed’s Rosengren’s testimony last Friday.

Continued interest in a broad exposure to commodities. Last week saw investors adding US$13mn of positive flows into broad commodity ETPs. The uncertainty on when the Fed will eventually hike rates and the future relationship between the EU and UK is pushing investors to consider exposure to asset classes other than equities and bonds. Commodities are known for its diversification benefit in a portfolio. The Bloomberg Commodity Index 3 Month Forward Total Return rose 8% year to date.

Key events to watch this week. Investors will be listening to the Bank of England rate decision this Thursday, a potential non-event as Governor Carney indicated last week that another rate cut is in the agenda for November meeting. ECB president Draghi is also scheduled to speak on Thursday while preliminary market confidence data for September are released for the US and for Germany.

Video Presentation

Edith Southammakosane, 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

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Securities issued by the Issuers are direct, limited recourse obligations of the relevant Issuer alone and are not obligations of or guaranteed by any of UBS AG (”UBS”), Merrill Lynch Commodities Inc. (”MLCI”), Merrill Lynch International (”MLI”), Bank of America Corporation (”BAC”), Bloomberg Finance LP (”Bloomberg”), Société Générale (”SG ”), Shell Trading Switzerland, Shell Treasury, HSBC Bank plc, JP Morgan Chase Bank, N.A., Morgan Stanley & Co International plc, Morgan Stanley & Co. Incorporated or any of their affiliates or anyone else or any of their affiliates. Each of UBS, MLCI, MLI, BAC, Bloomberg, SG, Shell Trading Switzerland, Shell Treasury, HSBC Bank plc, JP Morgan Chase Bank, N.A., Morgan Stanley & Co International plc and Morgan Stanley & Co. Incorporated disclaims all and any liability whether arising in tort, contract or otherwise (save as referred to above) which it might have in respect of this communication or its contents otherwise arising in connection herewith.

Funds

Austria: Investors should base their investment decision only on the relevant prospectus of the Company, the Key Investor Information Document, any supplements or addenda thereto, the latest annual reports and semi-annual reports and the memorandum of incorporation and the articles of association, which can be obtained free of charge upon request at the Paying and Information Agent in Austria, Erste Bank der oesterreichischen Sparkassen AG, Graben 21, A1010 Wien, Österreich and on www.etfsecurities.com.

France: Any subscription for shares of the Funds will be made on the basis of the terms of the prospectus, the simplified prospectus and any supplements or addenda thereto. The Company is a UCITS governed by Irish legislation and approved by the Financial Regulator as UCITS compliant with European regulations although may not have to comply with the same rules as those applicable to a similar product approved in France. Certain of the Funds have been registered for marketing in France by the Authority Financial Markets (Autorité des Marchés Financiers) and may be distributed to investors in France. Copies of all documents (i.e. the prospectus (including any supplements or addenda thereto, the Key Investor Information Document, the latest annual reports and the memorandum of incorporation and articles of association) are available in France, free of charge, at the French Centralizing Agent, Société Générale, Securities Services, at 1-5 rue du Débarcadère, 92700 Colombes – France. Germany: The offering of the Shares of the Fund has been notified to the German Financial Services Supervisory Authority (BaFin) in accordance with section 310 of the German Investment Code (KAGB). Copies of all documents (i.e. the Key Investor Information Document (in the German language), the prospectus, any supplements or addenda thereto, the latest annual reports and semi-annual reports and the memorandum of incorporation and the articles of association) can be obtained free of charge upon request at the Paying and Information Agent in Germany, HSBC Trinkaus & Burkhardt AG, Königsallee 21-23, 40212 Düsseldorf and on www.etfsecurities.com. The current offering and redemption prices as well as the net asset value and possible notifications of the investors can also be requested free of charge at the same address. In Germany the Shares will be settled as co-owner shares in a Global Bearer certificate issued by Clearstream Banking AG. This type of settlement only occurs in Germany because there is no direct link between the English and German clearing and settlement systems CREST and Clearstream. For this reason the ISIN used for trading of the Shares in Germany differs from the ISIN used in other countries.

Netherlands: Each Fund has been registered with the Netherlands Authority for the Financial Markets following the UCITS passport-procedure pursuant to section 2:72 of the Dutch Financial Supervision Act.

United Kingdom: Each Fund is a recognised scheme under section 264 of the Financial Services and Markets Act 2000 and so the prospectus may be distributed to investors in the United Kingdom. Copies of all documents (i.e. the Key Investor Information Document, the prospectus, any supplements or addenda thereto, the latest annual reports and semi-annual reports and the memorandum of incorporation and the articles of association) are available in the United Kingdom from www.etfsecurities.com.

None of the index providers of the Funds referred to herein nor their licensors make any warranty or representation whatsoever either as to the results obtained from use of the relevant indices and/or the figures at which such indices stand at any particular day or otherwise. None of the index providers shall be liable to any person for any errors or significant delays in the relevant indices nor shall be under any obligation to advise any person of any error or significant delay therein.

 

Price-Dips Attract Commodity Inflows

Price-Dips Attract Commodity Inflows

Commodity ETP Weekly Price-Dips Attract Commodity Inflows

ETFS Platinum (PHPT) received its highest weekly inflow since November 2014.
ETFS Sugar (SUGA) sees its highest ever inflow.
Long oil ETPs continue to see inflows.
ETFS Corn (CORN) sees highest inflows since February 2014.
ETFS Physical Gold (PHAU) saw the highest outflows since June 2014.

Download the complete report (.pdf)

The Federal Reserve Open Market Committee sent a mixed message, acknowledging the softness in prices while pointing to strength in economic expansion and jobs. US Dollar appreciated, focusing on the implications of economic strengthening on the likelihood of a rate rise. Most US Dollar priced commodities fell. The optimism in economic activity may sit at odds with the slightly disappointing GDP figures released later last week and this week’s jobs numbers could drive a reversal in Dollar strength (and hence commodity price weakness) if they prove to be disappointing.

ETFS Platinum (PHPT) received its highest weekly inflow since November 2014. US$32.8mn flowed into PHPT last week. Platinum had rallied 6.6% since the beginning of the year before last week’s 3.6% correction trimmed the gains down to 2.2%. Investors appear to be buying into price dips. Global car sales have continued to rise, supporting demand for the metal that is used in autocatalysts.

ETFS Sugar (SUGA) sees its highest ever inflow. In a week of plummeting prices, SUGA saw US$42.9mn of inflows, more than double the next highest weekly inflow into the product in 2008. Sugar prices fell on the back of rain in Brazil providing relief to stressed land. Brazil is the world’s largest producer of raw sugar. India, the second largest producer, is currently deciding on how much export subsidies to award its cash-strapped sugar industry. Some of the recent volatility in prices has been driven by speculation on the size of this subsidy.

Long oil ETPs continue to see inflows. WTI and Brent ETPs have respectively seen 18 and 7 consecutive weeks of inflows. Despite price declines over most of that period, investors appear convinced that prices will increase. We believe that supply will tighten as loss-making non-OPEC oil rigs are progressively switched off. Last week a 7% fall in rig counts in the US drove a late-week price rally. OPEC will also likely cut production in the second half of the year once the rest of the world has demonstrated their willingness to pull back.

ETFS Corn (CORN) sees highest inflows since February 2014. Bargain-hunting drove US11.0mn of inflows into CORN. Corn price fell 3.2% last week, 10.0% over the past month. With bumper production last year, many expect reduced planting this year to help stabilise the market.

ETFS Physical Gold (PHAU) saw the highest outflows since June 2014. Reversing part of the US$163.8mn inflows from the previous week, US$108.5mn of outflows last week tracked the 2.1% decline in gold price. While there was no immediate fallout from the change in Greek government, the risk of surprises in the bail-out renegotiation process could drive haven demand for gold higher in coming months.

Key events to watch this week. After last week’s disappointing US Q4 GDP figures, the market will focus on the US jobs market data this week for signs of further economic stress. A weak payrolls reading will be seen as a cue for the Federal Reserve to delay rate rises that are expected in September this year. The market is currently looking for 233,000 new jobs added in January. The Bank of England and Reserve Bank of Australia are due to have their respective policy rate meetings this week. While no rate changes are expected, commodity price weakness could tip the balance for the RBA as it had done for the Bank of Canadian two weeks ago.

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.

Global Commodity ETP Quarterly

Global Commodity ETP Quarterly

We are pleased to present the Q4 2014 edition of the Global Commodity ETP Quarterly from ETF Securities, January 2015.

Highlights

A comprehensive and fully up-to-date reference guide to investing in global commodity ETPs and indices – no ETP type or geographic area is excluded. The report details the large and growing choice of commodity ETP exposures and strategies around the world.

Summary analysis of global commodity ETP flows, trading volumes and AUM trends. Includes a detailed analysis of the main trends in Q4 2014 and the outlook for 2015.

Roll yield analysis (contango/backwardation) broken down by individual commodity and commodity sectors.

Useful fundamental commodity data and information. Updated and revised data on inventory trends, futures market positioning, futures curve developments, commodity index compositions and weights.

Download the complete report (.pdf)

For more information contact:

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

Important Information

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

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.

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.