Silver ETPs saw the largest inflows since July 2009 last week as a new Greek debt package soothed over near term concerns for a sovereign default in the Eurozone and sparked interest in more cyclically-oriented assets. With COMEX speculative longs having dropped back down to end 2010 levels and the gold/silver ratio still low relative to recent history, silver has been primed for a strong rebound. This week market focus is firmly back on the other side of the Atlantic as US policymakers scramble to find a budget compromise to raise the debt ceiling before the August 2 deadline to avoid a debt default. This week also sees important growth indicators released for both the US and UK that will help solidify investors views on the likelihood of a growth rebound later this year…..
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Physically-backed gold ETC investment surge continues, with inflows up over $400mn over the past month. The debt agreement by European government officials last week does not appear to have been enough to slow investor demand for gold and other “hard assets”. The plan provides specific new funding for Greece and extends the usage of the existing bailout fund. However it stopped short of creating an enlarged safety net should market sentiment turn against a range of larger members. Nor did it tackle longer run issues such as enforcing fiscal targets. Across the Atlantic, S&P reiterated its threat to downgrade its US sovereign debt credit rating as the Aug 2 deadline to raise the US debt ceiling looms. S&P estimates that there is a 50:50 chance that it will cut the USA AAA government debt rating within 3 months.
Largest outflows from energy ETCs in 7 weeks, totalling $55mn. Apparent profit-taking occurred as West Texas Intermediate spot prices moved towards $100/barrel, their highest level in over a month, following market relief at the new EU Greek debt deal and stronger US earnings and activity data. Prices were also higher on an announcement by the International Energy Agency that it won’t extend its releases from emergency oil stockpiles. Redemption activity was spread across a variety of energy products, with broad basket energy, oil and natural gas ETCs seeing outflows of $22mn, $31mn and $2mn respectively.
Source: ETFWorld – ETF Securities Commodity ETP Weekly