Nitesh Shah, research analyst at ETF Securities, says the inflows into gold are not a ”tactical” trade but an insurance hedge against geopolitical risks.
It is becoming increasingly important for investors to consider ideas that are different from traditional asset classes and strategies. For nearly a decade, investors looking for alternative investment opportunities have relied on the expertise of ETF Securities.
ETF Securities is the world’s leading, independent exchange-traded product provider and a pioneer in commodities. We are dedicated to developing liquid, transparent investment solutions that can be traded on world stock exchanges.
Institutional investors, intermediaries and the individuals they ultimately serve trust ETF Securities to provide convenient, efficient and transparent exposure to commodities and other innovative investment strategies.
Physical Gold ETPs See Largest Inflows in 17 Months
Physical Gold ETPs See Largest Inflows in 17 Months. Bargain hunting continues to attract investors to wheat
ETFS Corn (CORN) saw highest inflows since March 2014
Long natural gas ETPs received US$5.8mn last week, marking the strongest monthly flows since November 2013
Investors took profit on ETFS Daily Leveraged Coffee (LCFE), redeeming US$4.2mn, after prices rallied 9.4% in a week
Investors bought ETFS Physical gold ETPs at the highest pace in 17 months as geopolitical risks continued to rise and Argentina approached sovereign default again. The European Union and US have increased sanctions on the Russian economy reflecting the growing animosity between the world’s super-powers. That has led to growing demand for haven assets. Standard and Poor’s, the rating agency, declared Argentina in default after it had missed a deadline for paying interest on $13 billion of restructured bonds, which my lead to further demand for defensive assets. The US posted a strong economic recovery in Q2 2014, growing 4.0% year-on-year after the weather disrupted Q1 2014 growth. Stronger US growth combined with a rebound in Chinese data and more decisive monetary stimulus in the euro area should continue to be supportive of commodity prices – metals in particular – in the coming months.
Physical gold ETPs saw their highest inflows since March 2013. After such a long stretch of equity market outperformance, many investors appear to be protecting themselves against rising geopolitical risk by adding perceived defensive assets such as gold to their portfolios. Last week when the gold price fell 0.6%, investors used the opportunity to add to allocations, with US$106.4mn flowing into physical gold ETPs (US$109.6mn into all long gold ETPs).
Bargain hunting continues to attract investors to wheat. ETFS Wheat (WEAT) and ETFS Leveraged Wheat (LWEA) respectively received their 11th and 12th consecutive week of inflows. Wheat prices fell to their lowest level since 2009 about two weeks ago. Since then, a modest uptick in prices has continued to drive flows in wheat ETPs. The USDA’s crop progress report shows that the harvest is progressing well in the US, but there have been relatively few upside production forecast changes in recent weeks, adding to price stability. WEAT received US$4.7mn of inflows while LWEA received US$2.8mn last week.
ETFS Corn (CORN) saw highest inflows since March 2014. With prices having fallen to their lowest since 2010, inflows into CORN increased to US$3.7mn, marking three consecutive weeks of inflows. While the USDA crop report indicates continued improvement to yield and excellent progress in crop development, many investors feel that prices are now closer to a trough.
Long natural gas ETPs received US$5.8mn last week, marking the strongest monthly flows since November 2013. As prices slipped 0.2% last week (13.8% over the month), investors built positions. Although natural gas usage in electricity production usually increases in the summer months due to higher demand for air conditioning, relatively mild weather in many states has led to lower demand for natural gas this season compared to normal. However, abrupt weather changes could reverse this trend and with gas storage levels significantly below normal, many investors are positioned for a snap-back in prices.
Investors took profit on ETFS Daily Leveraged Coffee (LCFE), redeeming US$4.2mn, after prices rallied 9.4% in a week. Reports of colder and rainier weather in Brazil, which produces 45% of the world’s Arabica coffee crop led to strong price gains. Excess rain has the potential to stall the harvest which is underway and the cold could lead to frost damage. However the forecast is for drier and warmer weather now, prompting the profit taking.
Key events to watch this week. Policy meetings at the Reserve Bank of Australia and Bank of England will likely be the focal point of market attention, while the evolving conflicts in Ukraine and Gaza and the debt crisis in Argentina will also captivate the investor interest.
ETF Securities Research team
ETF Securities (UK) Limited
T +44 (0) 207 448 4336
E info@etfsecurities.com
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Simona Gambarini, associate director of research at ETF Securities, says investors are rotating from gold ETFs into more cyclical commodities as they are less concerned about global risks.
Listen to Simona Gambarini explain if you still should hold gold.
It is becoming increasingly important for investors to consider ideas that are different from traditional asset classes and strategies. For nearly a decade, investors looking for alternative investment opportunities have relied on the expertise of ETF Securities.
ETF Securities is the world’s leading, independent exchange-traded product provider and a pioneer in commodities. We are dedicated to developing liquid, transparent investment solutions that can be traded on world stock exchanges.
Institutional investors, intermediaries and the individuals they ultimately serve trust ETF Securities to provide convenient, efficient and transparent exposure to commodities and other innovative investment strategies.
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.
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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Älska de oälskade? Få har missat att guldpriset har sjunkit kraftigt under de senaste veckorna. Dessvärre har nedförsbacken för både guld och guldbolag pågått under en längre tid. I år tillhör dessa investeringsalternativ några av de absolut sämsta. Nedgången i guld sett utifrån utvecklingen i den största fysiska guld-ETF:en SPDR Gold Trust (ticker GLD) uppgår till nästan 15 procent i år.
Den negativa utvecklingen i guldpriset har dock slagits med råge av guldbolagen, dvs. gruvbolag med inriktning på brytning av guld. Under samma period har den största guldbolags-ETF:en Market Vectors Gold Miners ETF (ticker GDX) sjunkit med hela 40 procent. De senaste dagarna har dock guldpriset och guldbolagen rekylerat upp. Det senaste guldprisraset ses av många investerare som en intressant möjlighet att investera i guld och guldbolag till attraktiva nivåer.
För en graf av spotpriset i guld och glidande medelvärden (SMA) för 50, 100 och 200-dagar, se graf nedan.
Fysiskt guld och hävstångs-ETF:er
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Guldbolags-ETF:er
[table id=614 /]
Källa: Factset, 23 april 2013, all avkastning i SEK och inklusive utdelningar. 0/- information saknas
