ETFS – Gold ETPs See Largest Inflows in a Month as Sovereign Risk Surges on Portugal Downgrade to Junk and Italy Contagion


Gold ETPs saw the largest inflows in a month as Portuguese sovereign bonds were downgraded to Junk status by Moody’s and Italian fiscal concerns caused Italy’s sovereign spreads to widen. Friday’s much weaker than expected  US  payrolls report was the nail in the coffin, causing investors to move into risk aversion mode. A slew of economic indicators this week, including industrial production releases from the US, Eurozone, China and India, will give a clearer picture of the state of the global economy…. 

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            – Physically-backed gold ETCs see largest inflows in a month. Gold saw  inflows of $56mn last week, the only precious metal to experience a rise in inflows. Further deterioration  of the Eurozone sovereign environment likely  drove the inflows, with Portuguese debt downgraded to junk status by Moody’s Investor Services and fiscal concerns pushing up Italy’s sovereign bond spreads. There is growing concern that Greece will be allowed to default on some of its debt and investors are increasingly concerned about the implications for other European  sovereign and bank  bond values. This will likely be a key focus of markets again this week.

            – Agriculture ETPs see over $100mn of inflows over past 5 weeks.  Investors  continue to  increase exposures to  ETF Securities’ agriculture ETPs, with inflows  for  the fifth consecutive week, totalling over  $100mn  over the period. AIGA received $8.6mn last week. Consistent flows into the broad basket agriculture ETP, ETFS Agriculture (AIGA),  shows evidence of  a continued desire by investors to diversify traditional portfolio holdings of correlated risk assets like equities.  Wheat ETPs have also  continued to experience strong inflows as poor growing conditions have adversely affected  the pace and quality of the US harvest and sharply lower prices attract buyers.  LWEA  received over $16.6m, the largest net weekly  inflow on record, while  ETFS Wheat (WEAT) received $9.7mn in net inflows.

            – ETFS Forward Industrial Metals (FIND) receives record  $17.3mn inflows last week.  Not  only have investors’ added to industrial metals positions in record volumes, but have also reduced positions in short industrial metal ETP’s indicating  some investors’ are anticipating a recovery in global economic activity later this year. ETFS Short Industrial Metals (SIME) saw near record outflows, amounting to $6.3mn last week.

            – Oil exposures reduced as investors’ boost natural gas longs.
            Investors added over $10mn to natural gas exposures last week on the back of substantial price declines, with ETFS Leveraged Natural gas receiving the  lion’s share – $9.5mn. ETFS Crude Oil ETPs saw outflows of  $28.3mn, as oil prices rose toward the top of recent ranges.

            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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