ETFS: Gold ETCs See Highest Inflows in 8 Weeks as Investors Hedge Greek Default Risk

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Greek default and sovereign contagion concerns continue to plague financial markets. Investors continued to accumulate positions in precious metals ETCs, particularly physically-backed gold ETCs, as a potential buffer against a sharp risk asset decline. Meanwhile short-term inventory fundamentals continue to drive investor behaviour in the energy and agriculture sectors…. 

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            Inflows into gold ETCs hit 8-week high as threat of Greek default looms.  The increasing likelihood of a ‘credit event’ for Greece and continued wrangling between the ECB and Germany on how to resolve the crisis prompted investors to build physicallybacked gold ETC positions totalling $65mn last week, an 8-week high. Inflows are up $164mn over the past 4 weeks.  Physicallybacked silver ETC inflows hit a 14-week high of $28mn.

            Oil ETC outflows rise as investors reduce long exposures following the OPEC meeting disagreement.  Outflows from ETFS Brent (OILB) hit an 8-week high, totalling $16mn, following OPEC’s failure to raise production quotas at its June meeting. Investors have pushed the Brent-WTI spread to fresh record levels as concern about inadequate Brent supplies contrasts with higher WTI inventory levels.

            Record inflows into ETFS Short Natural Gas (SNGA). Investors continued reducing positions in ETFS natural gas ETCs as the natural gas spot price reached the highest level since June 2010 ($4.85MMBtu) as the US Northeast region was beset by continued hot weather. Price action had remained constructive until the EIA’s weekly report showed higher inventory levels, prompting a sell-off. Outflows were spread between ETFS Leveraged Natural Gas (LNGA) (-$25mn) and ETFS Natural Gas (NGAS) (-20mn). ETFS  Short Natural Gas (SNGA) saw record weekly inflow of $12mn.

            ETFS Leveraged Wheat (LWEA) sees record inflows as investors look to leverage falling inventory levels. Wheat prices continued modestly lower last week as non-US supply gradually comes back on-stream. However, sharp declines in stockpiles on the back of inclement US weather prompted position accumulation in LWEA, totalling $14mn last week. Last week saw the first inflows into long agricultural ETCs in 5 weeks.

            Investors split over direction for industrial metals.  With  developed world growth indicators appearing to stall at the same time as emerging market growth rolls on, investors seem torn as to the direction for cyclically-geared assets like industrial metals. ETFS Industrial Metals (AIGI) received $2.1mn in inflows last week, as ETFS Short Industrial Metals (SIME) received $2.7mn in inflows. Similarly, ETFS Copper (COPA) received $2.5mn in inflows while ETFS Short Copper (SCOP) saw inflows of $2.4mn last week.


            Source: ETFWorld – ETF Securities Commodity ETP Weekly


            – Valuesabove100% indicatean above average turnover compared to either the prior 30 trading days or the prior 260 trading days.

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