Etikett: nickel

Agriculture ETPs standout during the summer doldrums

ETF Securities Agriculture ETPs standout during the summer doldrumsAgriculture ETPs standout during the summer doldrums

ETF Securities Weekly Flows Analysis – Agriculture ETPs standout during the summer doldrums

  • Coffee recorded the largest weekly inflows since May 2015.
  • Crude oil ETPs recorded outflows for the sixth consecutive week as prices near US$50/bbl.
  • Nickel recorded outflows of US$11m for the week and US$25 for the month on likely profit taking.
  • Minor moves in fund flows in comparison to previous weeks due to the summer doldrums.

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The summer doldrums have been taking a toll on the volume of flows last week. In precious metals, which are particularly sensitive to comments from central bankers, prices have remained steady as investors waited for any hints from them at the Jackson Hole meeting on Friday. Consequently inflows have been have been minimal, with US$8.8m in gold ETPs. Despite the threat of interest rate hikes there have been net flows of US$338m year-to-date in gold ETPs with outflows in short positioning, suggesting investors aren’t worried about any significant downside risks for gold in the immediate future. In addition, the price of gold gained nearly US$20/oz. this morning as a missile from North Korea overflew Japan early Tuesday.

Crude outflows totalled US$11.3m for the week and since mid-July we have seen outflows of US$225.5m. We continue to observe a fairly established trend of investors selling out positions when the price of crude is above US$50/bbl. Inflows then tend to resume when the oil price falls below US$45/bbl. We believe this is likely to continue as oil is likely to remain range-bound, trading between the lower marginal cost of production for the US tight oil producers and US$55/bbl, the 90th percentile of the broader oil producers cost curve.

Nickel saw outflows of US$12.1m for the week and US$25.9 for the month on likely profit taking. The metal is valued as one of the cheapest when comparing current prices to marginal cost. Prices have also been a laggard relative to its industrial metal peers for the full year. The metal is however playing a catch up over the past month, triggering profit taking from bargain hunters. Industrial metals have been the best performer over the last month in the commodities sphere, having risen 8% versus broader commodities remaining flat. Import data from China is the likely reason for the outperformance. We continue to expect China data to beat expectations and many forward looking data points, such as electricity consumption and port volumes have been rising in recent months.

Coffee saw inflows of US$8.7m, the largest weekly inflows since May 2015. Coffee remains one of the weakest performers year to date in agriculture. Although recent news of an outbreak of the borer beetle, due to the ban of certain pesticides, suggests there could be a burgeoning supply constriction.

Inflows into long wheat ETPs outpaced the peak observed following the extreme drought in the US in 2013. Since the peak in 2014, inflows into long wheat ETPs have reached new records whilst the market remains ample supplied with prices continuously depressed below its 10-years average.

 

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.

A tactical play to political uncertainties

A tactical play to political uncertainties

ETF Securities Asset Allocation Research – A tactical play to political uncertainties

Highlights

  • For February, the tactical portfolio is reducing its allocation in US and French equities while overweighting Canada, India, Brazil, Russia and Turkey.
  • After two months underweighting most bonds except US investment grade, the tactical portfolio is taking a neutral position on rising interest rates and inflation expectations.
  • Within commodities, the portfolio tactically underweights nickel and tin, increasing allocation in corn and sugar while remaining neutral on energy and precious metals.

For February, the tactical portfolio is reducing its allocation in US and French equities while overweighting Canada, India, Brazil, Russia and Turkey.

After two months underweighting most bonds except US investment grade, the tactical portfolio is taking a neutral position on rising interest rates and inflation expectations.

Within commodities, the portfolio tactically underweights nickel and tin, increasing allocation in corn and sugar while remaining neutral on energy and precious metals.

Political uncertainties around the world are growing and may last longer than the market expects. While the divorce between the UK and the EU remains full of uncertainties, the German, French and Dutch elections are likely to add further uncertainty. Although we feel many elections pledges are unlikely to become a reality, the US may not be the trade partner the UK is seeking for as, since his inauguration, President Trump has been loosely delivering on what he has promised during his campaign. While market volatility has not picked-up yet, inflation is rising in the US, EU and UK, increasing the risk of central bank policy errors.

February 2017 positioning

Although very close to its lower band, the market volatility index (VIX) still stands between its historical average and its lower band, suggesting a more balanced tactical split between equities and bonds. The portfolio therefore has 45% in equities, 45% in bonds and 10% in commodities while its strategic benchmark holds 55% in equities, 35% in bonds and 10% in commodities.

Within the equity space, the CAPE (Cyclically Adjusted Price to Earning) valuation model suggests reducing allocation in the US and four European countries while overweighting Canada, Brazil, Russia, India and Turkey. European countries to underweight include France but also Italy, Denmark and, due to rising valuations, Sweden replacing the Netherlands this month. The US CAPE ratio is at its highest since December 2014, standing 47% above its 10-years median. For January positioning, the France CAPE ratio was also at its highest since 2007 before declining slightly this month. Among the countries at the other end of the spectrum, Brazil and Russia continue to show the largest differentials between their CAPE ratios and their respective 10-year medians, suggesting that these countries remain largely undervalued and justifying a tactical increase in their weights.

The below table highlights how our tactical positions have changed for the past three months compared to the strategic benchmark and our new positions for February.


(click to enlarge)

For November and December 2016, the bond model suggested to underweight most bond categories with the exception of US investment grade, as inflation expectations and interest rate expectations in the US and the EU were at a turning point. Last month, the model suggested returning to the strategic portfolio weights as both rates were rising in tandem. With the CDS (Credit Default Swap) of each bond hovering around its historical average, the tactical portfolio keeps a neutral position for February as well.

For commodities, the contrarian model is taking a complete shift for grains and softs from underweighting wheat, soybeans, cotton and coffee for January positioning to overweighting corn and sugar for February. While the model suggested underweighting copper, lead and overweighting zinc for January, it now suggests underweighting nickel and tin. The model has been tactically neutral on precious metals for the second consecutive month and shifts from overweight to neutral on energy.

Portfolio performance

The tactical portfolio still has the lowest level of volatility compared to a traditional balanced 60/40 portfolio, and the strategic benchmark, improving the Sharpe ratio by 35% on average to 0.44 compared to 0.37 for the 60/40 and 0.30 for the strategic portfolio.


(click to enlarge)

Whilst underperforming the 60/40 benchmark by 0.2%, the tactical portfolio outperforms its strategic benchmark by 0.6% per year since January 2005.


(click to enlarge)

With the exception of equities, each asset class in the tactical portfolio outperforms its counterpart in the 60/40 and strategic benchmarks. The bond component outperforms by 0.6% on average while the commodity component outperforms by 0.2%, illustrating the efficiency of our fundamental-based models in improving the risk/return profile of their respective asset class as well as the tactical portfolio.

In addition, the tactical portfolio provides higher protection from the downside risk with a maximum drawdown of -27.2% compared to -38.5% for the 60/40 and -39% for the strategic benchmark.

Finally, the portfolio recovers faster to its previous peak (2.42 years versus 3.25 years for both benchmarks).

Portfolio methodologies

Our strategic benchmark follows a long-only strategy with 60 investments across three asset classes: commodities (25), equities (28) and bonds (7). As illustrated below, the initial weights are based on the weighting methodology of:

The Bloomberg Commodity Index for commodities

The MSCI AC World Index for equities

The Barclays bond indices for bonds

(click to enlarge)

The strategic portfolio represents a balanced portfolio with 55%, 35% and 10% allocated in equities, bonds and commodities respectively. Every month, the strategic portfolio rebalances into the weights set by the above benchmarks.

Our tactical portfolio aims to outperform its strategic benchmark by applying fundamental-based models to reflect our expertise in each asset class and our views of the global economy. The tactical portfolio rebalances every month to a new set of weights determined by the models below:

The equity-bond relative trade model sets the weights at the asset class level between equities and bonds while commodities will remain at 10% all the time

The CAPE model sets the weight for equities

The bond model sets the weight for bonds1

The contrarian model sets the weight for commodities

Important Information

General

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

The information contained in this communication is for your general information only and is neither an offer for sale nor a solicitation of an offer to buy securities. This communication should not be used as the basis for any investment decision. Historical performance is not an indication of future performance and any investments may go down in value.

This 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 communication may contain independent market commentary prepared by ETFS UK based on publicly available information. Although ETFS UK endeavours to ensure the accuracy of the content in this communication, ETFS UK does not warrant or guarantee its accuracy or correctness. Any third party data providers used to source the information in this communication make no warranties or representation of any kind relating to such data. Where ETFS UK has expressed its own opinions related to product or market activity, these views may change. Neither ETFS UK, nor any affiliate, nor any of their respective officers, directors, partners, or employees accepts any liability whatsoever for any direct or consequential loss arising from any use of this publication or its contents.

ETFS UK is required by the 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.

Global growth risks stays Fed’s hand

Global growth risks stays Fed’s hand

ETF Securities Commodity ETP Weekly – Global growth risks stays Fed’s hand

Highlights

•  Investors turn to gold in times of uncertainty.

•  Investors move into selective broad basket ETPs.

•  Net inflows into short copper ETPs.

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The Federal Reserve refrained from raising rates last week, citing the rising risks around global growth. The US central bank appears to be outward looking compared to the last time it considered raising rates, a generation (9 years) ago. However, the lack of monetary tightening gave cyclical assets little cause for cheer as the market’s focus remained on the dovish sentiment around weakening global demand. China in particular is of concern, with the country targeting a lower rate of economic growth and struggling to stem the slide in its equity market. Little attention however is given to its recovering property market and its relatively robust imports of commodities like copper.

Investors  turn to gold in times of uncertainty. Ahead of the US Federal meeting last Thursday, gold ETPs saw inflows of US$40.9mn over the past week. While the decision to keep interest rates unchanged was generally expected in the futures market, economists were spilt in their forecasts in the week leading to the decision. Gold gained close to 2.15% on Friday, while the US dollar fell 0.6% after the FOMC meeting and end of Friday. Looser monetary policy is seen as currency debasing by some and gold as a hard, defensive asset stands to benefit. Gold ETPs have seen inflows nearly every week since mid-August when gold price broke down the US$1,100/oz. level for the first time as investors have been attracted to the relatively cheap hedge asset. Last week saw the highest inflows into gold ETPs in four weeks and many benefited from the close to 3% return over two days last week. If the current price momentum in gold continues, we are likely to see further inflows into the safe-haven asset in the near term.

Investors move into selective broad basket ETPs. Last week saw net inflows into precious metal, industrial metal and energy broad baskets ETPs. Many investors are rediscovering the diversification benefit of adding commodity baskets to their portfolios in light of their low correlation to other assets. The diversification benefit of a basket is greater than the diversification benefit of a single commodity. Energy broad basket ETPs saw their largest ever net inflows of US$25.2mn. Investors have been attracted to the bargain prices in energy commodities. Total net inflows into energy ETPs now stand at US$117bn since the price of oil fell below US$50/bbl. at the beginning of the year. Industrial metal broad basket and precious metal broad basket ETPs also saw inflows of US$14.3mn and US$9.8mn respectively, suggesting that market sentiment is slowly reversing after seeing outflows for most of this year.

Net inflows into short copper ETPs. After a short rebound, most industrial metals recorded losses again last week, partially offsetting the previous gains. Zinc and nickel were the worst performers, down 5.5% and 4.4% respectively. The severe earthquake in Chile during the night between Wednesday and Thursday temporary boosted the price of copper above US$5,400/ton. ETP investors, expecting the gains to be temporary, chose to short the red metal with US$8.1mn of inflows into ETFS Copper short copper (SCOP), the largest since March 2014.

Key events to watch this week. Existing home sales and durable goods orders from the US are expected to be lower this month than last, underscoring some of the loss in momentum that global risks present. US consumer confidence measured by the University of Michigan, on the other hand, is expected to improve.

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.

Industrial Metals Rally on Chinese Data and Stimulus

Industrial Metals Rally on Chinese Data and Stimulus

Industrial Metals Rally on Chinese Data and Stimulus – ETF Securities Commodity ETP Weekly

•    Third consecutive week of inflows into long oil ETPs.

•    ETFS Nickel (NICK) sees largest outflows since January on profit taking.

•    Rising US dollar and Greece’s survival in the currency union weigh on precious metal prices

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China’s better than expected GDP reading for Q2 helped industrial metals (with the exception of copper) gain. Policy stimulus in the country is likely to see demand continue to remain solid, while cuts to mining capex will help tighten the supply-demand balance further in the months ahead. The Chinese central bank announced its gold holdings for the first time since 2009 last week, revealing a 57% increase from its last announcement. It confirms that China’s official sector demand for the metal is strong and forms part of its US dollar diversification programme. A mixture of profit-taking and performance disappointment in the case of gold drove outflows from commodity ETPs this week.

Third consecutive week of inflows into long oil ETPs. Bargain-hunting continued with WTI and Brent slipping a further 3.5% and 1.9% respectively. A landmark deal struck between Iran and world superpowers to lift sanctions against the country opens the prospect of increasing oil supply from Iran. While it will take time for Iran to build the infrastructure to materially increase production, according to the IEA Iran has 17 million barrels of oil ready to ship and further 22 million of condensate that will weigh on prices in the short-term. An antagonized Saudi Arabia will also continue to pump oil at a break-neck pace to protect its market share and make it difficult for Iran to rebuild. The upshot is that high cost producers elsewhere will have to accelerate their plans to cut back on production. Prices should eventually rebound when supply is cut, and that is what ETP investors have positioned for. We saw US$16.3mn of inflows into long WTI ETPs and US$2.8mn of inflows into long Brent WTI ETPs. At the same time we saw US$6.3mn and US$3.1mn outflows from WTI and Brent short oil ETPs, respectively.

ETFS Nickel (NICK) sees largest outflows since January on profit taking. US$14.1mn outflows from nickel followed the 1.2% gain in price as Chinese data lifted the industrial metals complex.

Rising US dollar and Greece’s survival in the currency union weigh on precious metal prices. Greece managed to pass an austerity budget through parliament, satisfying its creditors’ condition for more bailout money. Meanwhile the ECB confirmed it will be dolling out a further €900mn in Emergency Liquidity Assistance (ELA) to its troubled banks, a step which will help its banks reopen. The new support increases the chances Greece be able to pay the €3.49bn it owes ECB today. Gold, historically a hedge against worst-case scenarios materialising, fell 1.7% last week, and slumped a more than 1.5% today. However, it had failed to gain any traction even when Grexit risks were at their highest. Meanwhile Federal Reserve Chair Yellen’s confirmation that the US central bank is keen to raise interest rates at a measured pace this year led to US dollar strength, weighing on all commodities – particularly the precious metals complex. Investor faith in gold as a haven asset faded further with US$175.6mn of outflows from long gold ETPs last week. However, with German finance minister Wolfgang Schäuble putting Grexit back on the political agenda on Friday, we fear that we are not out of the woods yet on the Greek debt saga.

In contrast to gold, the 2.9% fall in silver prices (0.5% further today) was seen as a bargain hunting opportunity as the metal’s industrial qualities bode well for demand in an environment of continued cyclical growth (the precondition for interest rate increases). US$3.3mn flowed into long silver ETPs.

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.

Oil Bargain Hunting Continues as Investors Shun Gold on Greek Deal

Oil Bargain Hunting Continues as Investors Shun Gold on Greek Deal

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

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

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

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

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

Download the complete report (.pdf)

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

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

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

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

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

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

For more information contact

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

Important Information

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.