Investment Strategies

Cyclical Commodities Continue To Attract Investors - ETF Securities

Ainhoa Barcelona Reporter London 1 May 2013

Cyclical Commodities Continue To Attract Investors - ETF Securities

Investors are continuing to buy more cyclical commodity exchange-traded products such as silver, platinum and palladium, whereas their appetite for gold is weakening, research from ETF Securities has found.

Last week investors withdrew $157 million from gold ETPs, bringing the monthly outflow to $419 million, following the fall in the price of the yellow metal earlier this month. Despite strong demand in the physical coin, bullion and jewellery markets, gold ETP holders are continuing to sell.

“The 15 per cent fall in prices experienced between 12 and 15 April has brought out bargain-hunters in the physical market,” ETF Securities said.

In contrast, investors are more attracted to cyclical precious metals. The ETFS Palladium Trust received inflows of $19.8 million, the largest since February 2012, while the ETFS Physical Platinum vehicle gained $8.7 million.

Long silver ETPs also saw a seventh consecutive week of inflows, with $5.3 million reported last week, and the metal may now be seen as offering a potentially attractive entry point for investors given the fall in net long speculative positions in recent months.

“Increasing demand for platinum group metals from the jewellery and autocatalyst sectors in emerging markets and the US, combined with ongoing supply concerns are likely to keep the metals in a supply deficit this year,” the firm added.

Similarly, outflows from long copper ETPs were their highest on record last week at $140 million following strong inflows most of this year. Investors took profit on the recent price bounce which saw a 2.7 per cent price increase last week.

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