Etikett: oil ETPs

Investors rotate into gold out of silver

ETF Securities Investors rotate into gold out of silverInvestors rotate into gold out of silver

ETF Securities Weekly Flows Analysis – Investors rotate into gold out of silver

  • Investors rotate back to gold, away from silver.
  • Emerging market bond ETPs see highest inflows since January.
  • Investors sell oil ETPs as price nears the top of trading range.

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Gold ETPs receive largest inflows since May 2017, while silver ETPs see largest outflows since July 2016. With gold holding its gains last week, investors increased their holding of the metal by US$64.7mn. A small miss in US ISM manufacturing figures and continued political volatility in the Trump Administration following the sacking of its Communications Director lent weakness to the US Dollar and support to gold. We believe that in the absence of shocks, gold will trade around current levels until the end of the year. However, should we get any shock events, gold could rise higher. Investors acknowledging this “hedge” trait of gold are buying into the metal as a source of portfolio insurance. Meanwhile long silver ETPs saw outflows of US$58.3mn, as its price failed to hold onto gains from the previous week. As economic growth continues, we expect that silver will outperform gold by the end of the year, which could see inflows into silver resume.

Inflows into Emerging Market government bond ETPs the highest since January 2017. Marking the third consecutive week of inflows into Emerging Market government bonds, inflows of US$18.6mn indicate that investor sentiment around emerging markets is continuing to grow. Gains in local government bonds of around 11% this year, underpin the recent increase in sentiment.

Third consecutive week of outflows from crude oil ETPs. Outflows of long US$75mn were the highest since May 2017. After the prior week’s gains in oil prices, investors continued to take-profit. By the end of the week, WTI oil had lost all its gains from the previous week. Investors continue to play a price range of US$40-55/bbl. When oil trades closer to the lower part of the range, we expect to see inflows resume. Recent price weakness comes as OPEC members are poorly conforming with their production limits. Kuwait and Russia are chairing a meeting today and tomorrow in Abu Dhabi with several OPEC and non-OPEC members participant in the deal to limit production. The spotlight will be shone on countries like Iraq, Gabon, Ecuador and UAE who are the cartel’s worst offenders.

Investors polarised on USD/EUR. Last week inflows into short USD-long EUR ETPs rose to US$6.2mn, breaking a five weeks of outflows. Meanwhile inflows into short EUR-long USD rose to US$6.3mn, marking seventh consecutive week of inflows. In aggregate there were US$14.6mn of inflows into USD ETPs. Despite recent weakness in the US Dollar and strength in the Euro, we think the broader currency market has misjudged the reticence of the ECB and that confidence in aggressive tapering in coming months misguided. We feel the recent Euro strength will fade, while tightening policy in the US will drive the US Dollar higher. Friday’s payroll report, which was considerably stronger than expected, should provide support to Dollar over the coming week, and reverse the weakness seen earlier last week.

For more information contact

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

Important Information

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

This communication is only targeted at qualified or professional investors.

The products discussed in this communication are issued by ETFS Commodity Securities Limited (”CSL”), ETFS Hedged Commodity Securities Limited (”HCSL”), ETFS Hedged Metal Securities Limited (”HMSL”), Swiss Commodity Securities Limited (”SCSL”), ETFS Foreign Exchange Limited (”FXL”), ETFS Metal Securities Limited (”MSL”), ETFS Oil Securities Limited (”OSL”), ETFS Equity Securities Limited (”ESL”), Gold Bullion Securities Limited (”GBS” and, together with CSL, HCSL, HMSL, SCSL, FXL, MSL, OSL and ESL, the ”Issuers”) and GO UCITS ETF Solutions Plc (the ”Company ”). Each Issuer (apart from SCSL) is regulated by the Jersey Financial Services Commission. The Company is an open-ended investment company with variable capital having segregated liability between its sub-funds (each a ”Fund”) and is organised under the laws of Ireland. The Company is regulated, and has been authorised as a UCITS by the Central Bank of Ireland (the ”Financial Regulator”) pursuant to the European Communities (Undertaking for Collective Investment in Transferable Securities) Regulations, 2003 (as amended).

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Gold to benefit from a more dovish Fed

Gold to benefit from a more dovish Fed

ETF Securities Weekly Flows Analysis – Gold to benefit from a more dovish Fed

  • Gold, platinum and silver ETPs to benefit further from a more dovish Fed.
  • Industrial metals ETPs saw US$31.5mn of inflows amid growing economic activity in the US and Europe and a potential surge in global infrastructure spending.
  • Inflows into oil ETPs returned after a one-week break as US oil inventories decline further.
  • Outflows from long EUR ETPs on high futures positioning and long USD ETPs on Yellen’s testimony.

Download the complete report (.pdf)

Gold, platinum and silver ETPs to benefit further from a more dovish Fed. Last week saw US$82mn inflows in precious metals ETPs, led by gold (US$46.8mn), then silver (US$23.9mn), platinum (US$6.8mn) and the basket (US$4.1mn). Janet Yellen’s comments last week on inflation cast some doubts among investors on whether the US Federal Reserve (Fed) will continue hiking rates by another quarter point this year. US headline inflation for June fell by 0.1% while core inflation came as unchanged at 1.7%. The gold price, as a result, rose by 1.2% over the past week. We however remain cautious and see a small 2.3% increase in the gold price for year-end. The price of gold is also a key driver of silver and platinum prices. With no evidence of industrial demand recovery, we believe both industrial precious metals will continue to benefit from the demand for safe haven assets. We believe silver still has upside potential by year-end while we see palladium near the top of its potential.

Industrial metals ETPs saw another week of inflows as manufacturing PMI continues to grow in the US and in the Eurozone. Last week saw US$31.5mn in industrial metals amid growing economic activity in the US and Eurozone with manufacturing PMI at 57.8 in the US and 57.4 in Europe in June. Investors favoured exposure to the basket for its diversification benefit (US$24.1mn). While the Chinese market deficit of industrial metals has reduced by 17% compared to its level in April 2016 according to the World Bureau of Metal Statistics, we believe infrastructure spending in China and India needs to respectively double and triple in order maintain current GDP growth rate which should be price supportive for the entire complex.

Inflows into oil ETPs returned after a week break as oil inventories in the US decline further. Oil ETPs recorded US$12.9mn inflows last week on the back of falling oil inventories in the US by 7.5mn barrels. US oil production, on the other hand, rose for the second consecutive week and is only 2.3% below to its peak in June 2015. OPEC’s latest release also reported an increase in oil production, threatening the OPEC and non-OPEC agreement as some producers look to have opened the tap again. Compliance to the agreement dropped to 78% according to the IEA.

The Euro and US dollar hit by a shift in investors sentiment. Long EUR ETPs recorded US$8.6mn of outflows last week and short EUR ETPs US$3.3mn inflows. In the face of weak inflation pressure and futures market positioning at the highest level in over six years, we believe there are downside risks for the Euro. In addition, we expect the European Central Bank to remain cautious on the extent of the discussion over tapering at this week’s policy meeting.

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.

Bargain-hunting continues among ETP investors

Bargain-hunting continues among ETP investors

ETF Securities Weekly Flows Analysis – Bargain-hunting continues among ETP investors

  • Oil ETPs saw massive inflows of US$130m after a sharp decline in US crude inventories.
  • Silver prices are attractive relative to gold, both have seen inflows of US$130m.
  • ETP Investors reduce their exposure to broad commodity ETPs, preferring to take tactical positions on individual commodities.

Crude oil ETPs saw US$128mn inflows representing 7% of crude assets under management, as investors see buying opportunities in recent price weakness. US crude inventories sharply declined (5.2mn barrels) last week, resulting in a 3% rebound of oil prices. Although inventory has been declining for five consecutive weeks, expanding US production led to withdrawals being low by seasonal standards up until last week. Despite the OPEC representatives’ comments about an extension of the production cuts to beyond the end of the year, the oil cartel revised upwards its estimates of the growth in non-OPEC supply from 400k to 950k barrels per day. As a result, market impact of the OPEC’s strategy remains subdued.

Strong inflows into gold and silver, totalling US$130mn despite sharp price declines. The very low volatility in equity markets suggests high risk appetite among investors, driving the gold price down by 0.4% last week, close to our year-end 2017 fair value of US$1230. While around 80% of silver’s price is explained by its correlation to gold, supply deficits, growing industrial demand and a tightening in exchange inventory provide upside potential for silver. Silver prices are relatively attractive compared to gold. We estimate silver’s fair value to be around US$20/oz by year end, presenting a potential upside of 20% from current price of US$16.4/oz.

US$18.2mn outflow from all commodity ETPs and US$25.7mn of outflows from industrial metal ETPs. We believe some investors are reducing their long exposure to broad commodity baskets in order to play more opportunistic trades such as crude oil and silver. However, industrial metals saw outflows of US$25.7mn in the past week as industrial metals dropped 2.4% month-to-date. Market participants expect a slight slowdown in Chinese economic activity in May which has also been weighing on metal prices. The slight disappointment from Chinese retail sales (10.7% vs. cons:10.8%yoy, prev:10.9%) and industrial production (6.5% vs cons:7.0%yoy, prev:7.6%) prints in April may continue to weigh on industrial metals’ prices.

Despite the trade weighted USD remaining weak we have seen inflows of US$35m of inflows in to USD long positions and outflows in short positions of US$19m over the last 3 weeks highlighting a potential contrarian position building, most of the positioning has been against the EUR.

US$9mn of inflows into robotic and cyber thematic ETPs. Robotic ETPs saw US$5.2mn of inflows last week and cyber security ETPs also saw inflows of US$2.8mn last week. Year-to-date, cyber and robotic thematic ETPs attracted US$300mn of inflows reflecting the growing appetite from long-term investors.

Video Presentation

Morgane Delledonne, Fixed Income Strategist 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.

Tighter supply and low prices bode well for platinum

Tighter supply and low prices bode well for platinum

ETF Securities Weekly Flows Analysis – Tighter supply and low prices bode well for platinum

Highlights

  • Metals with industrial applications attracted more than US$100mn inflows. Platinum stands out as a contrarian bet as prices rebound from 10-month low on signs of deepening supply deficit.
  • Investors continue to favour Euro despite elevated uncertainty ahead of key central bank meetings.
  • Weakness in oil prices triggered inflows into long oil ETPs after five weeks of outflows. We believe oil price will continue to trade range between US$40-55/bbl.

Silver inflows overwhelm gold as the metal records largest weekly inflows since March. Gold will likely remain under pressure ahead of the US Fed, Bank of England (BoE), Bank of Japan (BoJ) and Reserve Bank of Australia (RBA) meetings this week and the US election next week. Gold rose modestly, while US dollar slipped in the wake of Trump closing in on Clinton in polls amid the fall-out from FBI emails. Silver and metals with industrial applications in general took the lead last week as China looks set to meet its growth target of 6.7% this year. US$54mn went into long silver ETPs, US$39mn into long platinum ETPs, US$4.6mn into long copper ETPs and US$8.1mn into broad baskets of industrial metal ETPs.

Platinum could gain momentum trade as supply continues to tighten. Platinum price fell 18% since its August peak to a 10-month low the previous Friday. The threat of a massive strike in South African mines like in 2014 and the potential for the industry to be in deficit this year for the fifth consecutive year have surprisingly failed to support prices. We believe the plunge in net speculative long positions since early August explains most of the counterintuitive price weakness. ETP Investors have however increased their long positions in platinum ETPs highlighting that this level is an interesting entry point for bargain hunters betting on further supply tighteness in the coming year. Platinum ETPs recorded inflows last week for the fifth consecutive week totalling US$113mn.

First significant inflows in oil ETPs after five weeks of outflows. Oil prices rose 2% since the last OPEC meeting in September when members reached an agreement to limit oil output. While prices rallied following the news, we said that capping OPEC production at 33 million barrels alone will do little on its own to reduce the surplus and indeed oil prices fell 4% last week on rising US oil production and increasing sceptisim about OPEC’s ability to finalise the agreement. Investors appear split on oil’s next move. Last week bargain-hunters bought US$22mn of long oil ETPs, while US$7mn inflows into short oil ETPs highlight some investors scepticism.

Investors continue to increase positions in long Euro ETPs. Last week saw nearly US$25mn into long Euro ETPs. Around US$11mn were against GBP, US$8mn against USD and US$5mn against JPY. Short Euro ETPs also saw redemptions indicating investors view the euro area to be in decent shape ahead of the GDP and CPI releases this week.

Central banks on stage this week. The Fed, BoE, BoJ and RBA are all due to meet to decide on the future path for monetary policy this week. This could set the tone for a volatile week across all asset classes. A number of key economic data are also due to be released: EU GDP for Q3 and inflation data for October, US ISM manufacturing and China manufacturing PMI for October.

Video Presentation

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

For more information contact

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

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