Commodity ETP Weekly : Short Gold and Short Broad Commodity ETPs Continue to See Inflows

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ETF Securities short commodity ETPs continued to see inflows last week as tactical investors remained bearish gold, and a strong US dollar continued to weigh on sentiment towards commodities broadly. ……

    ETF Securities Research

    Global cyclical growth indicators were mixed, with Euro area Q1 GDP and US industrial production numbers disappointing, but US confidence, US leading indicators and Japanese GDP data showing upside surprises. The one bright spot was continued inflows into palladium ETPs, which gained on news of Johnson Matthey’s forecast of a large supply deficit in 2013.Short gold and short broad commodity ETPs see continued inflows.

    Mixed macro data and a strong US dollar caused most commodities to post negative returns last week. Some investors continued to take advantage of the trend, increasing their positions in ETF Securities’ range of short commodity ETPs. ETFS Daily Short Gold (SBUL) saw another US$7.5mn of inflows, bringing total inflows year-to-date to US$62mn, second only to the US$80mn into ETFS Daily Short Copper (SCOP) so far this year.  ETFS Daily Short All Commodities (SALL) saw US$5.7mn of inflows last week.Palladium ETPs continues to see investor buying.

    Coinciding with platinum and palladium week in London, Johnson Matthey published its semi-annual report last Monday, confirming a significant supply deficit in both platinum and palladium for 2012 and forecasting a further deficit in palladium in 2013 on the back of stronger demand from car makers. The world’s top palladium producer, Norilsk Nickel, estimates the palladium deficit will rise by 25% in 2013. The price of palladium rose by 5% last week while ETF Securities palladium ETPs saw net inflows of US$9.3mn.Physical gold ETPs continue to see outflows, leveraged silver ETP sees inflows.

    As the price of gold slid close to month-ago levels, outflows from gold ETPs continued, with close to US$440mn of outflows last week. Interestingly although the silver price fell 7.5% last week, investors started to build long positions, with US$5mn flowing into ETFS Daily Leveraged Silver (LSIL)

    Key events to watch this week: The Bank of Japan will likely further affirm its aggressive monetary easing stance following tentative signs that its policies are working, including its latest GDP reading and a strong upswing in machine orders. Investors will likely remain focused on any indications the Fed may be preparing an exit from its ultra-easy policy when Bernanke speaks and the FOMC meeting minutes are released on Wednesday.  The release of the BoE minutes, also on Wednesday, will also reveal whether the optimistic tone of the latest Inflation Report caused some members to step back from their support of further quantitative easing


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