Market Research

Cyclical Commodities Find Favour In Early 2012

Sally Ling London 5 April 2013

Cyclical Commodities Find Favour In Early 2012

In the first quarter of 2013, commodity investors moved out of gold exchange-traded products and into more cyclical commodity ETPs such as silver, copper, palladium, platinum and broad commodity trackers. According to research from ETF Securities, gold ETPs saw $9.2 billion of outflows during the quarter as improving US growth data had a negative effect on gold prices.

During the quarter, silver saw the strongest inflows of any single commodity, with $875 million of net new money. Broad diversified commodity ETPs were next with $288 million of inflows.

Agriculture ETPs also had a strong quarter, with broad diversified agriculture ETPs receiving $117 million of new inflows. This follows nearly 20 consecutive months of selling to the end of 2012. Both oil and natural gas ETPs saw large net outflows as higher prices caused investors to take profits.

“Since the Cyprus deposit confiscation, gold inflows have resumed (albeit tentatively) and flows into more cyclical commodity ETPs have slowed or reversed. How Europe deals with Cyprus and potential contagion to other peripheral European economies, and the sustainability of strong growth data from the US, will likely decide whether the recent reversal in the rotation out of gold into cyclical commodities is the beginning of a new trend or just a pause before the cyclical bull run continues,” Nicholas Brooks, head of research and investment strategy at ETF Securities, said in a statement.

 

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