Etikett: LOIL

The Fed rate hike looms large for commodities

ETF Securities The Fed rate hike looms large for commoditiesThe Fed rate hike looms large for commodities

Commodity ETP Weekly – The Fed rate hike looms large for commodities

  • Precious metal basket inflows hit 8-month high as FOMC meeting looms.
  • Divergent oil flows favour Brent as pressure remains on crude prices after OPEC monthly report continues to show an oversupplied market.
  • Flows into copper ETPs continue as further supply cuts reinforce a tighter market in 2016. 

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Inflows into Brent ETPs broadly offset outflows from WTI ETPs, although the outlook remains polarised. OPEC’s latest annual report continued to highlight the global supply glut, with output in November climbing 1% to 31.7mbpd. The market reacted negatively to the news with Brent crude oil closing below US$40/bbl for the first time since December 2008. WTI crude also reached a near 7-year low of US$35.80. Brent crude ETPs received inflows totalling US$18.7mn last week, broadly offsetting the US$22.1mn in outflows from WTI crude ETPs. Nonetheless, the headline total of outflows in WTI ETPs belies what we believe to be a significantly polarised market, with US$11.7mn of inflows into ETFS Daily Leveraged WTI crude oil (LOIL).

Energy sector ETPs received inflows for the fifth consecutive week, totalling US$205mn over the period.
Third consecutive weekly inflow into precious metal basket ETPs. Inflows into precious metals basket ETPs totalled US$14mn, the highest level since April 2015. While silver has yet to decouple from gold and is likely to range trade, platinum group metals (PGM) are being hampered by a weaker South African Rand. With South African production dominating global PGM supply, a weaker Rand is enabling miners to keep production elevated as it raises profitability. Political uncertainty is rising and the weaker Rand is likely to be a weight on PGM prices for the foreseeable future.

Gold ETPs break three week losing streak, registering modest inflows of US$1.2mn. Gold has been range trading ahead of the FOMC meeting this week, where an interest rate hike is expected. Near-term weakness could transition into medium term strength as inflation pressures build globally, and put downward pressure on real interest rates. Additionally, while the near certain rate hike could boost the USD and buffet the gold price (and commodities more broadly), we expect that the peak for the USD strength will occur in Q1 2015, turning a headwind into a tailwind.

ETFs Copper (COPA) receives third consecutive weekly inflows, totalling US$2mn. Following reports that Chinese smelters agreed to cut production, last week Freeport-McMoRan announced it is cutting 45,000 tonnes of copper, equivalent to around 0.3% of the global market. With the copper market in its fifth year of deficit, ongoing production cuts in the sector will continue to produce a tighter fundamental environment and we feel that it is only a matter of time before prices begin to respond.

Key events to watch this week.  The divergence in central bank policy is likely to be highlighted, with the FOMC looming large this week, with meetings also for the Riksbank, Norges Bank and the Bank of Japan. We expect a rate hike is a near certainty and that the market should begin to focus on the path of future tightening. We feel that the market is underpricing the magnitude that the Fed will need to raise rates in 2016 in order to counteract inflationary forces.

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.

Are commodities at a turning point?

Are commodities at a turning point?

Commodity ETP Weekly – Are commodities at a turning point?

•  Gold at a four-month high.
•  Net inflows into oil ETPs on strong Chinese imports.
•  Shift in copper sentiment.
•  As part of our ”Energy Wars” webinar series we welcome Richard Mallinson, a leading geopolitical analyst at Energy Aspects to join us, to discuss where next for the oil price.
Register here to attend

Download the complete report (.pdf)

Pressure on commodities seems to be easing on the back of technical support and better fundamental prospects. Although China imports fell by 17.7% over the past year to September, demand for some commodities remains resilient. Chinese oil imports so far this year rose 9% compared to the same period last year, while copper imports for September surged 18% compared to September 2014, suggesting that fears over China demand slowdown have been overblown. Despite a rising US Dollar (USD) robust Chinese economic activity should lend support to commodity prices this week. Sentiment towards the asset class is turning with investors increasing exposure to long commodity ETPs.

Gold at a four-month high. Gold rose 3.9% last week, marking the second consecutive week of positive returns and closing at a 4-month high at US$1,184.25/oz. on Thursday. Weaker economic indicators from US and Eurozone early in the week saw gold rally alongside a declining US Dollar. In addition, gold reached another technical support last Wednesday, crossing its 200 day moving average upward, often an indication that price increase is likely to continue in the near term. Inflows into long gold ETPs hit an eight-week high of US$42mn and marking five consecutive weeks of inflows. Gold has retraced some of the gains as US inflation surprised to the upside, in turn boosting the USD. Although rate hike expectations have been brought forward, market expectations indicate that the Federal Reserve is likely to begin the tightening cycle early next year, lending additional support to the commodities complex.

Net inflows into oil ETPs on strong Chinese imports. Oil ETPs recorded net inflows of US$29mn mainly into ETF WTI Crude Oil (CRUD) and ETFS Daily Leveraged WTI Crude Oil (LOIL) on strong demand from China. September oil imports were slightly higher than September last year. However China total oil imports so far this year rose 8.8% above its level at the same period last year, suggesting that Chinese demand for the commodity has been strong. Meanwhile larger-than-expected increase in US oil inventories last week weighed on the price of oil. WTI fell 6.2%, while Brent plunged 8.2% over the past week, partially offsetting the previous week’s gains. While the oil market remains amply supplied, strong demand from China combined with falling production in the US should eventually trim inventories and support oil prices in the medium term.

Shift in copper sentiment. Investors appear to be becoming more bullish on copper. ETFS Copper (COPA) recorded net inflows of US$9.1mn (a 10-week high) while ETFS Daily Short Copper (SCOP) saw outflows of US$31.1mn, marking the most aggressive cut in short ETP positions since June 2014. The International Copper Study Group’s (ICSG’s) data revisions have helped fuelled positive sentiment for copper. The metal has risen 2.5% since the release of ICSG updated figures on 6th of October and 7.3% since its six-year low hit in August. In addition, China copper imports in September 2015 grew 18% year-on-year, underpinning market expectations for tighter market conditions in 2015 and 2016.

Key events to watch this week. While China industrial production for October came below expectations this morning, better-than-expected GDP for Q3 and retail sales should help ease concern over a potential hard landing and lend support to commodity prices this week. Markit manufacturing PMI for October in Europe and the US should provide further colour on the current global demand for metals.

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

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.

Investors Shun Gold for Oil as Bargain-Hunting Resumes

Investors Shun Gold for Oil as Bargain-Hunting Resumes

ETF Securities Commodity ETP Weekly – Investors Shun Gold for Oil as Bargain-Hunting Resumes

•    Declining oil prices attract bargain hunters.

•    Precious metals recorded largest outflows in 19 weeks, totaling $309mn last week.

Download the complete report (.pdf)

Declining oil prices attract bargain hunters. This week ETFS WTI Crude Oil Classic (CRUD) and ETFS Leveraged WTI Crude Oil (LOIL) witnessed their third consecutive week of inflows of $20mn and $13mn respectively. Seasonal factors typically reduce reserves around this time of year, but stocks surged by 2.5m barrels defying predictions of 2.3m barrels decline. Investors continue to raise bets of a reversal in price of WTI crude oil as it settled below $50 a barrel for the first time since early April this year. We believe that the recent weakness in prices will encourage oil producers to tighten supply. Wood Mackenzie’s recent study indicates a US$200bn cut in investment across the industry, primarily in high-cost non OPEC, non-US production, that will lead to lower supplies in the future.

Precious metals recorded largest outflows in 19 weeks, totaling $309mn last week. As the price of gold slid to its lowest level since March 2010, ETFS physically-backed gold holdings saw net outflows of US$284mn, the largest in 19 weeks. Market sentiment towards the yellow metal continued to wane as existing home sales reached an 81⁄2 year high and jobless claims reached an 81⁄2 year low in the US increasing the probability of a rate hike and continued US dollar strength. There has been a significant decline in the ‘net’ long exposure in gold, with positioning reaching its lowest level since June 2013. This week Swiss customs data reported total gold outflows in June at 98.5 tonnes, its lowest level since August last year. Swiss gold shipments to China were down sharply by 25 per cent m-o-m while shipments to India were down a modest 12.5 per cent m-o-m. As India approaches wedding season we view current levels as supportive for accumulating positions.

As platinum dipped below the $1000 an ounce for the first time in more than 6 years, investors continued to sell out of long platinum ETPs. Outflows amounted to US$22.4mn, the highest since March 2015. Downward price pressure in PGMs led investors to offload US$7.3mn from ETFS Physical backed Palladium (PHPD). Investors are clearly spooked by the violent price declines, despite the prospects for a supply deficit amid strengthening demand for pollution abatement technologies.

Key events to watch this week. Investors will be on the lookout for direction on US interest rates as the Federal Reserve Open Market Committee convenes this week. While no change is expected at this meeting investors will be poised for cues on rate increases at its September meeting, when consensus expects the first rate increase since 2006. US durable goods orders, consumer confidence and GDP data will provide further guidance on dollar strength this week.

Video Presentation

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

For more information contact

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

Important Information

General

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

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

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

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

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

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

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

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

Risk Warnings

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

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

Signs of Slowing US Shale Output Lifts Crude

Signs of Slowing US Shale Output Lifts Crude

ETF Securities Commodity ETP Weekly Signs of Slowing US Shale Output Lifts Crude

Investors lock in profits as crude benchmarks rally.

Investors shed long copper exposure as price rebounds.

Soft US data prompts precious metal price recovery.

Download the complete report (.pdf)

After last week’s revelation that US consumer prices had tipped into deflation on an annual basis and retail sales surprised to the downside, investors will be monitoring US manufacturing and home sales data for continued signs of weakness. Any subpar data readings that reflect a moderation of US growth could delay market expectations of tightening and prove bullish for precious metals. In Europe, investor’s brace for a Greek default as signs emerge of deteriorating relations between the newly elected Syriza party and international creditors, calling into question Greece’s Eurozone membership.

Investors lock in profits as crude benchmarks rally. Investors withdrew US$52mn of funds from ETPs providing exposure to US crude this week as the price hit the highest level this year. Following a 25 week streak of inflows, long WTI ETPs have experienced the largest four weeks of outflows since 2010. ETFS Daily Leveraged WTI Crude Oil (LOIL) witnessed US$21.1mn of outflows, as US crude inventories grew by 1.3mn barrels, 2.7mn barrels below market expectations, indicating that US shale production may finally be declining in the face of recent price weakness. The weak inventory build corroborated an Energy Information Administration (EIA) report released earlier in the week that forecasted that US shale oil production would start to drop in May. Adding further to bullish sentiment was the withdrawal of government forces from oilfields in Yemen, reflecting a deteriorating internal situation which threatens the security of key oil transit routes. Going forward the price of crude will likely grind higher as shale output shows further signs of curbing and geopolitical tensions in the Middle East remain elevated. The main downside risks to the price in the near term are US Dollar strength and the potential for onshore oil storage capacity to reach limits and force supply onto the market.

Investors shed long copper exposure as price rebounds. The price of copper has rebounded from January lows, driven in part by the recent pullback in the US Dollar and the reduction of the Chinese Reserve Requirement Ratio (RRR). Long copper ETPs saw US$14.2mn of redemptions as investors harvest profits from the recent price bounce. Following data that showed that China grew at the slowest pace in six years, policy makers are under intensifying pressure to support growth targets. Investors in the copper futures market have cut short positions from record highs as accommodative measures are likely to boost the red metal and sustain its recent strong performance.

Soft US data prompts precious metal price recovery. Recent weak retail sales and jobs data has relieved bearish pressure on the precious metals complex. Soft US data pushed back expectations of rate normalisation which weakened the Dollar and boosted precious metals, with gold and silver rising 0.8% and 1.0% respectively. Gold and silver ETPs benefited seeing a total of US$7.1mn of inflows.

Key events to watch this week. This week cyclical commodities are likely to be in focus following recent stimulus measures announced by Chinese authorities and the release of manufacturing data for US, China and Europe. In Europe, aside from Greek debt negotiations, the UK will be under the spotlight as the Bank of England (BOE) releases minutes from its April meeting and the general election draws closer.

Video Presentation

Joshpreet Tiwana, 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.

Geopolitical Risks in Focus

Geopolitical Risks in Focus

ETF Securities Commodity ETP Weekly Geopolitical Risks in Focus

Dovish outlook causes gold bears to trim exposure.

Profit taking prompts ETFS Physical Silver (PHAG) outflows after 7.9% weekly rally.

Long WTI ETPs witness first weekly outflows in six months.

Download the complete report (.pdf)

Conflict in Yemen, Iranian nuclear talks and Greek debt negotiations will mean geopolitical risks are likely to dominate headlines and keep investor risk appetite subdued. As a result, asset price volatility will remain elevated, as illustrated last week by the impact of Saudi Arabia’s military actions, which sent the price of crude soaring. Towards the end of the week, investor attention will turn to US payroll data due, hoping to gain a better indication of the pace of interest rate hikes by the Federal Reserve.

Dovish outlook causes gold bears to trim exposure. Fed chair Yellen’s speech last week highlighted the gradual nature of the tightening cycle when it begins later in 2015. This has kept the US Dollar relatively subdued and precious metals prices supported as rate hike expectations continued to be pushed back – a process that began after the latest FOMC meeting. The gold price ended the week up 3.2% at US$1,199/oz, just below the important US$1,200/oz psychological level. The rally prompted US$109mn to exit ETFS Daily Short Gold (SBUL) as positive sentiment caused investors to reduce short gold exposure. Gold is likely to be supported by rising volatility in coming months, as investors dissect economic indicators to discern the start of the tightening cycle – currently expected at the September FOMC meeting.

Profit taking prompts ETFS Physical Silver (PHAG) outflows after 7.9% weekly rally. Silver followed gold higher last week as geopolitical concerns coupled with a relatively dovish tone from the US Federal Reserve about the pace and timing of rate hikes, boosted the demand for precious metals. Precious metals typically become an attractive alternative during periods of low interest rates and any perceived delays to rate normalisation in the US will act as a bullish factor for the complex. PHAG saw a net weekly redemption of US$7mn following the price rally, as investors locked in profits. This year silver has performed well rising 7.3% and has attracted of inflows US$70.7mn into ETPs providing long exposure.

Long WTI ETPs witness first weekly outflows in six months. US crude rallied 17% last week encouraging profit taking by investors with long exposure. The rally, initially instigated by Dollar depreciation. was assisted by Saudi led airstrikes launched in Yemen against the Houthi rebels, after the internationally recognised Yemeni president made pleas for assistance. Although Yemen produces relatively little oil, the bombings raised fears that the conflict would escalate between oil rich Saudi Arabia and Iran, which is believed to have provided arms, training and financial support to rebel forces. Long WTI ETPs, until now, had experienced the longest streak of net weekly inflows (25) since inception as investors positioned themselves for a recovery in oil prices. Last week, a total of US$50.1mn exited long oil ETPs, including US$26mn from ETFS Daily Leveraged WTI Crude Oil (LOIL), the largest net weekly outflow since 2011.

Key events to watch this week. Market focus will be on US payroll data due on Friday, as investors continue to try and preempt the pace of rate hikes in the US. Geopolitical risks will continue to remain in the fore as the deadline for an Iranian nuclear deal approaches and the impasse over a Greek debt deal lingers. Precious metals investors will be monitoring Eurozone CPI, which will likely reveal the ECB still has much to do to help boost inflationary pressures via strengthening demand.

Video Presentation

Joshpreet Tiwana, 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.