Etikett: Palladium

Gold ETP outflows hit a 15 month high

ETF Securities Gold ETP outflows hit a 15 month highGold ETP outflows hit a 15 month high

ETF Securities Weekly Flows Analysis – Gold ETP outflows hit a 15 month high
Weekly

  • Gold ETP outflows reach the highest in over a year.
  • Diversified commodity basket ETPs receive inflows worth US$41mn, reversing the prior two weeks trend of outflows as investors seek diversification in broad commodity baskets.
  • Optimism over a deal being brokered at the OPEC meeting prompted further inflows into oil ETPs totalling US$18m, bringing the total inflows in the last four weeks to US$236mn.

Download the complete report (.pdf)

Gold ETPs outflows of US$173m were the highest since August 2015. Gold prices have come under increased pressure, dipping below the psychologically important $1200 per troy ounce mark, owing to fears of the effect of additional rate hikes by the Fed in 2017 in response to higher inflation in the US. We believe this scenario is unlikely, leaving investors susceptible to a highly volatile USD. Meanwhile rising equity markets and treasury yields following the euphoria surrounding Trump’s election victory are generating a higher risk appetite, further supressing gold’s price. Investors are largely discounting the political uncertainty facing 70% of Europe by GDP in the coming months when populists are rising rapidly in the polls. While we expect further weakness in gold prices in the run-up to the rate hike, we view these price points as a great buying opportunity given the ongoing risks of rising inflation and political uncertainty.

Silver, known to be an industrialised precious metal, remained the outlier among the precious metals complex, garnering inflows worth US$15mn.

After reaching a 17-month high, palladium ETPs saw US$5mn in outflows likely owing to profit taking. Johnson Matthey’s forecast of a 651,000oz palladium deficit in 2017 (up from 356,000oz in 2016), helped drive palladium prices 1.5% higher last week, contrasting the price declines in the rest of the precious metals complex. Investors took profit on the best performing precious metal this year (up 32.7%).

Inflows into diversified ETPs rise to US$41mn, reversing the prior two weeks trend of outflows as investors invest in broad baskets to benefit from diversification.

Following the technical sell over the past two weeks, bargain hunters re-emerge into Emerging Market (EM) Debt ETPs. Inflows amounted to US$25m. We maintain our view that EM countries have a stronger credit standing than what is commonly perceived, leaving room for further upside in prices.

Optimism over the OPEC meeting prompted further inflows into oil ETPs totalling US$18m, bringing the total inflow in the last four weeks to US$236mn. Oil is likely to remain volatile this week as the oil producing cartel decides on how to implement a production cut they agreed to in principle in September. With Saudi Arabia indicating a production freeze is good enough, the market could well be disappointed this week.

What to watch this week. OPEC hosts its 171st meeting in Vienna on Wednesday with ‘technical’ meetings today and tomorrow to thrash out details on how to cut production. Indications of cohesion could lead to oil prices rallying, while disappointment could follow if the stalemate persists. Friday’s release of payroll data should provide further insight into the health of the US labor market.

Video Presentation

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

For more information contact

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

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Gold or silver? Platinum or palladium?

Gold or silver? Platinum or palladium?

Gold or silver? Platinum or palladium? How do investors make a decision as to which precious metal is the appropriate choice for portfolio diversification purposes?

Rising rates could spell good news for precious metals. That’s because a stronger economy drives the need for manufacturing components, many of which rely on platinum, palladium, and silver. And, a stronger economy boosts jewelry sales, which accounts for half gold’s annual demand.*


* International Gem Society

For further information, please visit ETF Securities US.

Disclosure

The ETFS Silver Trust, ETFS Gold Trust, ETFS Platinum Trust, ETFS Palladium Trust and Precious Metals Basket Trust are not investment companies registered under the Investment Company Act of 1940 or a commodity pool for purposes of the Commodity Exchange Act. Shares of the Trusts are not subject to the same regulatory requirements as mutual funds. These investments are not suitable for all investors. Trusts focusing on a single commodity generally experience greater volatility.

The value of the Shares relates directly to the value of the precious metal held by the Trust and fluctuations in the price could materially adversely affect investment in the Shares. Several factors may affect the price of precious metals, including: (1) A change in economic conditions, such as a recession, can adversely affect the price of the precious metal held by the Trust. Some metals are used in a wide range of industrial applications, and an economic downturn could have a negative impact on its demand and, consequently, its price and the price of the Shares; (2) Investors’ expectations with respect to the rate of inflation; (3) Currency exchange rates; (4) Interest rates; (4) Investment and trading activities of hedge funds and commodity funds; and (5) Global or regional political, economic or financial events and situations. Should there be an increase in the level of hedge activity of the precious metal held by the trust or producing companies, it could cause a decline in world precious metal prices, adversely affecting the price of the Shares. Should there be an increase in the level of hedge activity of the precious metal held by the Trusts or producing companies, it could cause a decline in world precious metal prices, adversely affecting the price of the shares.

Commodities and futures generally are volatile and are not suitable for all investors. Shares in the Trust are not FDIC insured and may lose value and have no bank guarantee.

Investors buy and sell shares on a secondary market (i.e., not directly from trust). Only market makers or “authorized participants” may trade directly with the fund, typically in blocks of 50k to 100k shares. The Fund’s net asset value per share (NAV) is calculated by dividing the value of the Fund’s total assets less total liabilities by the number of shares outstanding. Market Price returns are based on the bid/ask spread at 4 p.m. ET and do not represent the returns an investor would receive if shares were traded at other times.

Carefully consider the fund’s investment objectives, risk factors, and fees and expenses before investing. For further discussion of the risks associated with an investment in the funds please read the prospectus at www.etfsecurities.com/etfsdocs/USProspectus.aspx. Or visit the ETF Securities website: www.etfsecurities.com.

Diversification does not ensure a profit nor protect against loss.

ALPS Distributors, Inc. is the marketing agent for ETFS Silver Trust, ETFS Gold Trust, ETFS Platinum Trust, ETFS Palladium Trust and ETFS Precious Metals Basket Trust

Oil sees outflows as it trades at top of range

Oil sees outflows as it trades at top of range

Oil sees outflows as it trades at top of range – Weekly Flows Analysis

Highlights

  • Second consecutive week of crude oil outflows as Brent trades closer to the top of range
  • Investors sell GBP and EUR shorts
  • Price declines in precious metals drive investors to sell silver and platinum but boosts gold buying

Download the complete report (.pdf)

Oil ETPs see second week of outflows as oil trades closer to the upper end of the recent trading range. With Brent hovering close to US$50/bbl, investors continued to take profit on their long positions. The oil benchmark has struggled to trade significantly above US$50/bbl in the past few months. More US tight oil has become profitable around that level and that threatens to increase supply. Talks of oil market stabilisation by OPEC members initially supported prices, especially as inclusion of Russia and Iran in the effort boosted optimism. However, Saudi Arabia poured cold water over that optimism as the Energy Minister claimed that market forces are already helping the market come to a balance. US crude oil stocks surprisingly rose last week driving WTI down 1.8%. We saw US$43.7mn of outflows from long crude oil ETPs last week.

Investors trim short GBP positions by US$17.9mn as Sterling appears to have reached rock bottom. After the UK voted to leave the EU in June, GBP depreciated more than 10% reflecting the inevitable economic decline and prolonged uncertainty that will ensue as the country failed to have a plan of action to manage the exit. However, the economic weakness, aggressive central bank stimulus and the potential for a fiscal blow-out are largely priced in, giving little scope for further depreciation.

Investors sell EUR shorts. Investors sold US$9.0mn of long USD, short EUR ETPs, largely reversing inflows into the same the previous week. With the EUR having depreciated against the USD by 1.1% last week investors took profit on their positions.

Gold continues to see inflows for sixth consecutive week. With US durable goods orders coming in higher than expected and the second GDP reading confirming a solid economic base, the Federal Reserve is running out of excuses for not raising rates. Although heavily hedged with emphasis that the outlook is uncertain and monetary policy is not on a preset course, Yellen said that she believes the case for a rate rise has strengthened in recent months. Gold prices fell close to 1.5%. Investors however continue to buy gold ETPs, as they add to hedges in their portfolios. Inflows of US$121.5mn into gold ETPs mark a four-week high.

Palladium and silver ETPs see outflows. While palladium ETPs have seen outflows for seven consecutive weeks, last week’s outflow of US$12mn was the largest since November 2015. After a 30% rally since mid-June palladium’s performance has stumbled in recent weeks, driving higher outflows. Silver’s decline from US$20/oz to US$18.5/oz in August saw an outflow of US$7mn. The fundamentals for both palladium and silver remain strong and so lower prices offer investors a good entry point. Both metals are in a supply deficit and stand to benefit from an uptick in the industrial cycle. Palladium’s use in pollution abatement equipment and silver’s use in photovoltaics is likely to see their demand increase as global environmental standards tighten.

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.

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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.

EU referendum dominates ETP flows

EU referendum dominates ETP flows

  • EU referendum dominates ETP flows
  • Last week saw investors continue to purchase safe haven assets as inflows into precious metals totalled US$111mn.
  • Long crude oil saw inflows for the first time after nine straight weeks of outflows.
  • Investors uncertainty fuelling inflows into both long and short GBP ETPs.
Last week saw investors continue to purchase safe haven assets as inflows into precious metals totalled US$111mn. Year to date inflows into precious metals now total US$2.5bn, closing in on the highest six-month period of US$2.8bn witnessed in October 2012 when the gold price hit US$1900, prompted by concerns over quantitative easing and the Greek crisis. This time around, we see investor concerns over the risk of the UK referendum and its potential departure from the EU destabilising the global economy, the US elections and overly dovish US Federal Reserve monetary policy supporting the gold price. We saw inflows across the board in precious metals, gold, silver, platinum and palladium ofUS$73mn, US$17mn, US$15mn and US$1mn respectively, whilst some investors sold out of short silver positions. Safe haven investing also saw outflows from industrial metals ETPs. Whilst palladium flows were relatively low, the trend now looks to have troughed after year of outflows. This chimes with our research which highlights the palladium has been in supply deficit for the last four years, trades well below marginal cost and is a key beneficiary of the EU6 regulations on car emission controls. Long crude oil saw inflows for the first time after nine straight weeks of outflows. During those nine weeks, investors were selling long positions and purchasing short positions across the whole energy sector with the exception of heating oil. We see this more as profit-taking and risk aversion rather than a structural bearish view adopted by investors as the short positions have been relatively much smaller. We see the Brent fair value of US$55 per barrel at the year-end, reflecting the 75th percentile of the crude production cost-curve, where supply demand responses occur. Furthermore, we expect Iran production to have achieved a 6 to 9-month production peak due to reluctance from international oil companies to invest. In currencies the biggest moves have been in Sterling ETPs, with short GBP rising from US$58mn at the beginning of the year to its peak today of US$117mn. Following a very similar pattern witnessed during the Scottish Referendum where flows peaked at US$124mn. Interestingly, due to the recent sell-off in GBP against a broad set of currencies, some investors have begun purchasing long positions in GBP, with the inflows into long GBP ETPs almost equalling the inflows into of short GBP ETPs over the last week. Key events to watch this week. Investors will be closely following the UK’s EU referendum on Wednesday. The vote is dictating short-term sentiment, and in turn market movements. The polls are indicating a slight edge for the ‘Remain’ campaign, but investor optimism that is currently boosting cyclical asset prices will quickly unravel on any sign of the ‘Leave’ result becoming more likely.

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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6 Reasons Why Platinum and Palladium Are Likely to Shine in Investment Portfolios

6 Reasons Why Platinum and Palladium Are Likely to Shine in Investment Portfolios

Gold is up nearly 20 percent in 2016, with investors flocking into the yellow metal for its potential safe-haven benefits as the market evaluates central bank policies and volatility in equities. While the gold rally continues to dominate financial headlines, investors may be missing other precious metals opportunities, like Platinum and Palladium.

Investors seeking investment alternatives to gold should take a closer look at platinum and palladium. We believe these shiny white metals offer investors great price entry points and powerful long-term growth drivers. Specifically, here are six reasons why investors should consider adding platinum and palladium to their portfolios.

1.    Scarcity

According to the International Platinum Group Metals Association (IPA), annual production of platinum and palladium amounts to around 440 tons, much less than many common metals.

Geographically, production is highly concentrated. 58 percent of world primary production of these metals takes place in South Africa and Russia accounts for an additional 26 percent.1  Nearly all of the rest comes from Zimbabwe, Canada, and the United States. Deposits in Russia and North America have high palladium contents while deposits in South Africa and Zimbabwe are richer in platinum.

2.    Stable and Growing Demand

As with any assets, investors need to know where they are putting their money. Most investors probably haven’t thought much about platinum or palladium since their last high school chemistry quiz, although they are probably more familiar with other precious metals like gold and silver.

Platinum and palladium are used mostly for industrial purposes such as the manufacturing of catalytic converters in automobile exhaust systems (platinum for diesel vehicles, palladium for gasoline) which convert pollutant gases into less harmful ones.

Across major consumer markets worldwide, auto sales are increasing and automobile manufacturers continue to increase per-vehicle loadings of each metal to meet more-stringent emissions standards worldwide, particularly in Europe, China and the U.S. These trends translate into highly favorable supply demand dynamics for platinum and palladium.

3.    Favorable Macroeconomic Trends

Coupled with an overall uptick expected this year in industrial production, platinum and palladium’s cyclical economic exposure makes them a potential ideal portfolio alternative. According to recent Bloomberg data, the white metals climbed to the highest level in more than three months, entering bull markets, on speculation that infrastructure spending in China will boost demand for the metals used in auto pollution-control devices. Last week, platinum posted the biggest gain since October, while palladium surged the most since 2001, helped by the outlook for low borrowing costs and rising auto sales in the U.S.

4.    New Emissions Regulations

With favorable supply-demand fundamentals already in place, new emissions regulations could push prices even higher this year. For example, the World Platinum Investment Council and SFA revealed that the rollout of 2016 European emission regulations last year resulted in a 7% rise in platinum loaded into diesel cars.

1 Chamber of Mines of South Africa, Annual Report 2012; figure does not include recycling.

5.    Further Upside Potential

Other factors may also spark higher prices, including dollar depreciation, rising jewelry demand, South African labor unrest (which in 2014 halted mining for five months where 80% of the world’s platinum is sourced), energy security, or an acceleration of mine closings based on the dwindling return on investment (ROI).

6.    Available as an ETF

For investors looking to add exposure to these precious metals to their portfolios, exchange-traded funds offer an easy entry point. They provide access to physically-backed, liquid assets offering pure exposure to the metals without any vaulting or operational issues of a mining stock.

Takeaway for Investors

For a typical investor who probably holds less than 5% of their portfolio in alternatives like commodities, platinum and palladium provide cyclical economic exposure in contrast to gold, which is more defensive in nature. And with industrial production expected to rise this year, platinum and palladium are well- positioned for growth.

So, while most people probably don’t know where platinum and palladium reside on the periodic table, investors seeking alternatives in the commodity space may be wise to seek them out.

Commodities and futures generally are volatile and are not suitable for all investors.

Carefully consider the fund’s investment objectives, risk factors, and fees and expenses before investing. For further discussion of the risks associated with an investment in the funds please read the prospectus at www.etfsecurities.com/etfsdocs/USProspectus.aspx or visit the ETF Securities website: www.etfsecurities.com.

ALPS Distributors, Inc. is the marketing agent for ETFS Silver Trust, ETFS Gold Trust, ETFS Precious Metals Basket Trust, ETFS Platinum Trust and the ETFS Palladium Trust.

ETF 000909 3/31/17

About the Author
Nitesh Shah is a Commodities Strategist at ETF Securities. Nitesh has 13 years of experience as an economist and strategist, covering a wide range of markets and asset classes. Prior to joining ETF Securities, Nitesh was an economist covering the European structured finance markets at Moody’s Investors Service and was a member of Moody’s global macroeconomics team. Before that he was an economist at the Pension Protection Fund and an equity strategist at Decision Economics. He started his career at HSBC Investment Bank. Nitesh holds a Bachelor of Science in Economics from the London School of Economics and a Master of Arts in International Economics and Finance from Brandeis University (USA).