Etikett: Oil

Global Commodity ETP Quarterly Q3 2014

ETFSCommQ320141 Global Commodity ETP Quarterly Q3 2014Global Commodity ETP Quarterly Q3 2014

Global Commodity ETP Quarterly Q3 2014 The report includes:

  1. A comprehensive and fully up-to-date reference guide to investing in global commodity ETPs and indexes – no ETP type or geographic area is excluded. The report details the large and growing choice of commodity ETP exposures and strategies around the world.
  2. Summary analysis of global commodity ETP flows, trading volumes and AUM trends. Includes a detailed analysis of the main trends in Q3 2014 and the outlook for the rest of the year.
  3. Roll yield analysis (contango/backwardation) broken down by individual commodity and commodity sectors.
  4. Useful fundamental commodity data and information. An updated and revised inventory trends section, positioning data, futures curve developments, commodity index compositions and weights.

 

Click here to download the complete report (.pdf)

 

Throughout the Global Commodity ETP Quarterly, commodity ETPs have been grouped into six main sectors as detailed below:

  • Diversified Broad contains Diversified Broad, Diversified Broad ex Agriculture and Livestock, Diversified Broad Light Energy and Diversified Broad ex Energy basket commodity ETPs
  • Agriculture contains Diversified Agriculture basket, Cocoa, Coffee, Corn, Cotton, Grains, Rice, Softs, Soybeans, Soybean Meal, Soybean Oil, Sugar and Wheat commodity ETPs
  • Energy contains Diversified Energy basket, Biofuels, Carbon, Coal, Crude Oil, Electricity, Gasoline, Heating Oil, Natural Gas and Petroleum commodity ETPs
  • Industrial Metals contains Diversified Industrial Metals basket, Aluminium, Copper, Lead, Nickel, Tin, Uranium and Zinc commodity ETPs
  • Livestock contains Diversified Livestock basket, Feeder Cattle, Lean Hogs and Live Cattle commodity ETPs
  • Precious Metals contains Diversified Precious Metals basket, Gold, Palladium, Platinum, Rhodium and Silver commodity ETPs Exchange Traded Products (ETPs) is the umbrella term covering Exchange Traded Funds (ETFs), Exchange Traded Commodities (ETCs), Exchange Traded Notes (ETNs), US Limited Partnerships (LPs), US Guarantor and other statutory trusts. Commodity ETPs are open-ended securities listed on a stock exchange tracking an underlying commodity asset. They do not include ETPs tracking the listed equities of companies involved in commodity businesses.

If not otherwise stated, all data in the publication is in US dollars.

 

Commodity ETP Flows Resilient in the Face of Price Declines

 

Summary

 

Commodity ETPs were hit hard in Q3 2014 as a strong US dollar and concerns about China and Europé growth knocked many commodity prices down towards their production costs.

Following two consecutive quarters of increases, commodity ETP assets under management (AUM) fell by US$12.6bn to US$110.7bn, the lowest level since Q1 2010. However, close to 96% of the AUM decline was caused by price declines, with net investor outflows during the quarter a relatively resilient US$550mn.

The resilience of investor flows likely reflects a number of factors. The first is that most of the large, leveraged tactical players in commodity ETPs cleared their positions in 2013, as reflected in the large outflows that year. The bulk of investors in commodity ETPs today tend to be strategic investors with medium to long-term time horizons who tend to be less sensitive to short term price swings.

A second key factor is that with most commodities now trading near (and in some cases below) their estimated all-in or marginal costs of production, many investors with long-term investment horizons are looking at current prices as attractive accumulation levels on the view on-going production cuts and a steady structural rise in demand from increasingly wealthy large population developing countries will ultimately push prices higher.

Lastly, a large part of the commodity price declines over the past month or so has been driven by the strong rally in the US dollar and concerns about slower growth in China and Europe. US dollar strength is being driven by healthy US economic growth – a positive for commodity demand. Meanwhile, policy-makers in both China and Europe have started – and are expected to continue – to react strongly to recent signs of economic weakness.

Given the above potential positive price catalysts and the fact that many commodities are trading at their lowest levels relative to their production costs since the crisis of 2008, there are some signs tactical investors are beginning to nibble – particularly with valuations across a number of major equity and most fixed income markets looking stretched. Over the course of Q3, broad commodity index ETPs saw inflows as well as some of the more bombed out individual commodities and sectors such as agriculture, select industrial metals and natural gas.

Key Trends

 

Gold ETPs accounted for nearly 60% of the decline in global commodity ETP AUM, with AUM dropping by US$7.4bn to US$69bn. Of the AUM decline, 82% was due to the gold price decline over the quarter. While investors sold into the price decline, selling was far more muted than during the price declines of 2013, indicating most tactical investors have already exited.

 

 

After gold, platinum and palladium saw the largest outflows in Q3, with US$194mn and US$74mn of outflows respectively. Silver ETPs saw the largest inflows in Q3, with US$452mn of net new investor flows despite (or perhaps because of) the sharp price decline. Many investors appear to view the silver price below US$20/oz as a good long-term accumulation level.

 

 

Agriculture ETPs also saw inflows during the quarter as low prices brought investors into most of the grains as well as cotton.

 

Broad commodity index tracking commodity ETPs saw inflows of US$561mn in Q3 2014, indicating strategic investors are starting to view commodities as a more attractive asset class as equity and bond market valuations have become more stretched and commodity prices have declined.

 

Oil ETPs saw strong inflows in August as prices lurched lower, however in September these flows reversed as it appears some investors capitulated in the face of continued price declines. For the quarter as a whole oil ETPs saw US$83mn of outflows. Meanwhile as the natural gas fell from its heights investors started to nibble, with US$21 of inflows

 

Industrial metal ETPs saw mixed flows, with the net result a very modest US$29mn of inflows into the sector. While copper ETPs saw US$29mn of outflows, aluminium, nickel and industrial metal basket ETPs all saw inflows.

 

Summary and Outlook

 

Assuming the US maintains its current economic trajectory, the key to commodity performance and flows through the rest of 2014 and into 2015 will be how successful both Europe and China are in restimulating their economies. Stronger economic growth in both of these major markets would not only help boost commodity demand and improve general sentiment, but also likely take some of the steam out of the very strong recent US dollar rally (which has been as much about weakness abroad as strength at home) that has been weighing on commodity performance. Increasingly aggressive easing moves by ECB President Mario Draghi and policy-makers in China in the coming months and quarters could be the stimulus commodity markets have been waiting for.

Click here to download the complete report (.pdf)

 

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. When being made within Italy, this communication is for the exclusive use of the ”qualified investors” and its circulation among the public is prohibited.

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

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

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

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

China Growth Concerns and Strong Dollar Hit Commodities

China Growth Concerns and Strong Dollar Hit Commodities

China Growth Concerns and Strong Dollar Hit Commodities Commodity ETP Weekly

Highlights

  • Diminishing global risks and US Dollar strength weigh on precious metals.
    Oil ETPs see 10th week of inflows as investors view current price levels attractive.
    Wheat ETPs record 18th consecutive week of inflows as price falls to 4-year low.

 

Download the complete report (.pdf)

Concerns about China’s growth outlook, stagnation in Europe and easing geopolitical tensions in the Black Sea region weighed on commodity performance and drove outflows from commodity ETPs last week. Precious metals saw the largest outflows in over a year, with silver and both long and short gold ETPs seeing outflows. The trades are not all one way, however, with the price correction attracting bargain hunters into oil and wheat. Most of the factors that have hit commodity prices over the past few weeks are temporary, and present interesting opportunities for medium to long-term investors in our view. As China eases to boost growth, the US economy recovers, and years of gradually tightening capacity starts to push up inflation, we believe commodity prices – particularly those most tightly linked to the industrial cycle – should recover from current beaten down levels.

Diminishing global risks and US Dollar strength weigh on precious metals. Precious metals saw US$263mn of outflows last week, with gold (both long and short) and silver ETPs seeing the largest outflows. Disappointing economic data from China and Europe weakened demand for the industrial precious metals, with US$17mn flowing out of palladium ETPs. In our view, the price declines are excessive based on our fundamental outlook, with silver, platinum and palladium likely to benefit most if China and US growth continue to recover as we expect. Gold closed just above our estimated all-in cost of production and the widely watched support level near US$1,200/oz. While the strengthening US dollar has weighed on gold in US dollar terms, it has fared much better in Euro terms. We view the current gold price as a very attractive entry point for longer-term investors.

Oil ETPs see 10th week of inflows as investors view current price levels attractive. Oil ETPs saw the 10th consecutive week of inflows last week, bringing total inflows over the period to US$192mn, as investors view current price levels as an attractive entry point. While the International Energy Agency revised down its forecast on global oil demand for 2014 and 2015, demand is still expected to strengthen in Q3/Q4 2014 and into 2015. With OPEC expected to announce production cuts for 2015 if demand and prices remain depressed, the price of Brent and WTI can potentially rebound to US$110/bbl and US$105/bbl respectively over the next few months in our view.

Wheat ETPs record 18th consecutive week of inflows as price falls to 4-year low. The USDA recently announced that they expect production to climb to a record of 720mn metric tons in 2014. However, investors have slowly been building positions in wheat, on expectations optimistic forecasts will not be met. With wheat priced for perfect growing conditions, any small setback in weather in major producing countries or an escalation in trade restrictions could drive a price rally. Meanwhile, ETFS Sugar (SUGA) recorded US$2.2mn of inflows last week, as the price dropped to a 5-year low on expectations production will outpace demand this year.

Key events to watch this week. A relatively light week in terms of economic releases. Markit manufacturing PMIs for China, the US, and the Eurozone will likely be the focus as investors assess the pace of the global recovery after a few disappointing releases. Investors will also be watching for any possible new easing initiatives from China’s economy and policy officials.

Video Presentation

Simona Gambarini, 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 and Gold Remain Top Trades as Bargain Hunting Drives Inflows

Oil and Gold Remain Top Trades as Bargain Hunting Drives Inflows

Commodity ETP Weekly, Oil and Gold Remain Top Trades as Bargain Hunting Drives Inflows

Highlights

Bargain hunting drove US$7.4mn into long oil ETPs, marking the longest stretch of weekly inflows since 2012.

Long wheat ETPs saw their 17th consecutive week of inflows as investors mounted bets on a less bearish USDA report.

Concern over China and supply prompted another week of outflows in industrial metal ETPs, marking the largest cumulative four week outflow since May 2013.

Gold and oil ETPs both respectively saw their 9th consecutive week of inflows. The price of gold and oil has fallen in recent weeks, in part reflecting a reduction in the geopolitical premium following a ceasefire agreed by Ukraine and Russia. Bargain hunting investors have chosen to increase their holdings of oil with its price looking particularly attractive, with both Brent and WTI oil benchmarks trading below US$100/bbl. We believe OPEC is likely to cut production if demand for oil continues to remain weak, which will in turn help support prices. Despite weakness in gold prices, investors have generally maintained holdings over the past few months. Daily flow data however indicates that some investors are losing patience with gold in recent days and its weak price could test the endurance of some investors if the relatively stable geopolitical situation lasts.

Bargain hunting drove US$7.4mn into long oil ETPs, marking the longest stretch of weekly inflows since 2012. Although bets weren’t completely one-sided, with US$2.7mn of inflows into short oil ETPs, many investors are doubtful that the current weakness in oil price can persist. Weak global demand for oil products this summer, combined with the limited impact of geopolitical risks on OPEC and Russian oil supply sent both Brent and WTI prices to multi-month lows. With production reaching multi-decade highs, US oil inventories had remained above its 5-year range until very recently and stockpiles at Cushing have been slowly rebuilding. While Chinese oil imports and the US summer driving season have not been as supportive of oil demand as expected, the US Energy Information Agency (EIA) is forecasting a supply deficit for the second half of 2014 and OPEC is anticipating a pick-up in global oil demand during the remaining months of 2014. Should that pick-up in demand not materialise, we believe that OPEC will cut production from its current target of 30mb/d.

Long wheat ETPs saw their 17th consecutive week of inflows as investors mounted bets on a less bearish USDA report. After months of successive production and stock upgrades, some investors thought that last Thursday’s World Agricultural Demand and Supply Estimate report would show some stabilisation. It turns out that they were disappointed. The price of wheat fell 4.2% last week alone and is now trading at the lowest level since 2010. With wheat priced for perfect growing conditions, any small hiccup in weather in major producing countries or an escalation in trade restrictions could drive a price rally. More bargain hunting is likely with prices at multi-year low levels.

Concern over China and supply prompted another week of outflows in industrial metal ETPs, marking the largest cumulative four week outflow since May 2013. Last week, US$9.1mn was redeemed from ETFS Industrial Metals (AIGI) basket and most long industrial metal ETPs saw outflows. Long copper ETPs in particular saw US$18.6mn of outflows. Industrial metal prices declined as jitters over the health of Chinese demand troubled investors and the probability of the Philippines following Indonesia’s lead in banning ore exports has lessened. By the end of the week, however, China reported strong credit growth for the past month, which should go a long way to ease concerns about its ability to drive demand for commodity-intensive house building and infrastructure construction.

Key events to watch this week. The Federal Reserve’s FOMC meeting will be the focus of market attention. The US central bank is expected to continue to taper its bond-buying programme at the current rate, which will only leave another meeting (after this week’s) before it announces a stop to more purchases. After a disappointing US payrolls report, the market will watch out for any changes in forward guidance that could signal rate changes slower than current market expectations.

Download the complete report (.pdf)

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 and Gold ETPs Remain in Focus Despite Easing Geopolitical Tensions

Oil and Gold ETPs Remain in Focus Despite Easing Geopolitical Tensions

ETF Securities – Oil and Gold ETPs Remain in Focus Despite Easing Geopolitical Tensions

Geopolitical risks remained a focus for investors last week, with gold and oil ETPs seeing the 8th consecutive week of inflows. Russia and Ukraine progressed towards the termination of the conflict by agreeing on a permanent ceasefire, but fighting resumed on Sunday, threatening to end the truce. While the geopolitical situation appears to be improving, demand for defensive assets is likely to remain strong as uncertainty surrounding the relationship between Ukraine and Russia lingers. Meanwhile, the ECB surprised the market by cutting interest rates by 10bps and announcing a programme of purchasing asset backed securities last week, in an attempt to reinvigorate economic activity.

 

Download the complete report (.pdf)

 

Highlights

Oil and gold ETPs continue to see inflows despite easing geopolitical tensions.

ETFS Daily Leveraged Silver (LSIL) sees the highest inflows since June as price drops to US$19oz.

Profit taking drives US$18.1mn of outflows from ETFS Aluminium (ALUM)

Oil and gold ETPs continue to see inflows despite easing geopolitical tensions. While it appears the easing in geopolitical tension surrounding the Russia/Ukraine standoff has weighed on precious metal and oil prices, investors continued to build hedges into their portfolios, with US$21.6mn added to long gold and oil ETPs last week. Gold ETPs recorded their 8th consecutive weekly inflows, totalling US$3.3mn last week. While the geopolitical situation appears to be improving, demand for defensive assets is likely to remain strong as uncertainty surrounding the relationship between Ukraine and Russia lingers. Moreover, we believe the continued recovery of US and China economies will also support demand for oil during the second half of 2014 with OPEC likely to reduce supply if demand and prices remain depressed. With speculative net long positions in oil futures likely to recover in the near term, we view current oil price levels as a good entry point and target Brent and WTI at US$110/bbl and US$105/bbl respectively.

ETFS Daily Leveraged Silver (LSIL) sees the highest inflows since June as price drops to US$19oz. Inflows into LSIL totalled US$6.9mn last week. The silver price has been trending lower for the past 7 weeks and it is now getting close to attractive levels, in our opinion. While inventories remain elevated, signalling lacklustre industrial demand, silver price is trading closer to its marginal cost of production that currently stands at US$15oz. The Silver Institute expects demand for the metal to grow at around 5% per annum over the next two years thanks to a sharp turnaround in the global photovoltaic industry, led by China. In the medium term we expect the trend of destocking and price appreciation to resume as the global recovery gains pace.

Profit taking drives US$18.1mn of outflows from ETFS Aluminium (ALUM). Aluminium price is up 19% since the beginning of the year as production cuts have substantially improved the fundamentals of a market which has been plagued by oversupply for years. At the same time, copper ETPs saw US$68mn of outflows last week. Copper has lagged other industrial metals like aluminium, nickel and zinc this year, on aggressive production expectations and fears of a slowdown in China. However, we believe fears of copper oversupply are overblown and that copper remains attractive at current price levels given the underlying fundamentals.

Key events to watch this week. This week is relatively light in terms of economic releases, with industrial production figures for the UK, Japan, the Eurozone and India dominating the news flow. China’s new yuan loans, CPI and exports will also be monitored as investors try to assess the effectiveness of government policies on the real economy

Download the complete report (.pdf)

Video Presentation
Simona Gambarini, 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.

Gold and Oil ETP Inflows Benefiting from Heightened Geopolitical Risks

Gold and Oil ETP Inflows Benefiting from Heightened Geopolitical Risks

Gold and Oil ETP Inflows Benefiting from Heightened Geopolitical Risks. Geopolitical risks drive the 7th consecutive week of inflows into long gold and oil ETPs.

Profit taking prompts US$3.7mn of outflows from ETFS Physical Palladium (PHPD).

ETFS Copper (COPA) sees fifth weekly inflow, totalling of US$6.9mn, as US growth picks up pace.

Price correction drives the highest inflows since May 2014 into ETFS Soybeans (SOYB).

Investors’ focus remained on geopolitical risks last week, with gold and oil ETPs seeing the 7th consecutive week of inflows, as the Ukrainian-Russian conflict escalates. Russian posturing appears to be escalating and increasingly questioning Ukrainian sovereignty and the UN has urged Western nations to intervene. While oil and gold prices are yet to react to heightened risks, investors are rebuilding hedges into their portfolios.

Geopolitical risks drive the 7th consecutive week of inflows into long gold and oil ETPs. Long oil ETPs saw US$11.8mn of inflows, as the Ukrainian-Russian conflict escalates. The United Nations accused Russia of having more than 1000 regular troops in the Ukraine, pressuring Western countries to intervene. While both oil and gold prices are yet to react to heightened geopolitical risks, investors have been building positions as a hedge against further deterioration of the situation in Eastern Europe and the Middle East. Russia is the world’s 2nd biggest oil producer after Saudi Arabia, accounting for 13% of global oil output and 16% of world total exports in 2013. Should Russia ban oil exports, it is unlikely that Saudi Arabia capacity to fully compensate for the loss in production. With the EIA forecasting a 9,000 barrel a day surplus in 2014, the loss of a portion of the 10.7mn barrels a day from Russia could have a substantial impact on prices. Meanwhile, long gold ETPs saw US$13.4mn of inflows last week, as investors become increasingly defensive.

Profit taking prompts US$3.7mn of outflows from ETFS Physical Palladium (PHPD). Palladium ETPs have seen over US$100mn of outflows over the past months as fears of trade sanctions against Russia, palladium biggest producer, drove the price higher. While palladium is likely to continue being buoyed by potential supply disruptions in Russia, we believe platinum underperformance is excessive and anticipate the spread between the two metals will widen over the next few months.

ETFS Copper (COPA) sees fifth weekly inflow, totalling of US$6.9mn, as US growth picks up pace. The US Department of Commerce revised Q2 growth upwards to 4.2% from 4.0%, on stronger business spending and exports. We believe fears of copper oversupply are overblown and that copper remains attractive at current price levels. We expect investors are now beginning to focus on tightening supply-demand conditions and we expect the copper price to rebound to around US$7,500. Meanwhile, profit taking drove US$2.5mn of outflows from ETFS Aluminium (ALUM) as the price hit US$2,100 for the first time in 18 months.

Price correction drives the highest inflows since May 2014 into ETFS Soybeans (SOYB). Soybeans price tumbled to a nearly 4-year low last week, on record crop expectations from the US. About 70% of soybeans in the main growing areas were deemed in good or excellent condition as of August 24. This is the highest level seen since 1992 at this time of the year. However, early signs of Sudden Death Syndrome (SDS), a disease that contaminates the crop, showed up in the Midwest over the past week and threatens to drastically reduced yields. With soybean prices having lost over 18% since the beginning of the year, investors are starting to rebuild positions.

Key events to watch this week. Bank of England, the European Central Bank and the Bank of Japan will all be holding policy meetings this week. The focus will likely be on the ECB following Draghi’s dovish speech in Jackson Hole two weeks ago. Jobs are a key concern for policymakers and US non-farm payrolls later this week are expected to show the US recovery remains robust. Manufacturing data will also be released this week for China, India, the Eurozone, the UK and the US, to gauge the relative pace of the global recovery.

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Video Presentation

Simona Gambarini, 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
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