Inflows Return To Commodity ETPs With Silver Taking Top Spot

LONDON (Aug 14)   Industrial and precious metal exchange traded products saw record weekly inflows last week on the back of stronger than expected Chinese industrial production, offering some relief to the month-on-month outflows from commodity ETPs.

Led by inflows to silver ETPs, ETF Securities’ Physical Silver ETP saw inflows hit an all-time high of $145 million (€109.5 million) last week, pulling back from a 34.3 percent fall in price this year.

According to data from ETF Securities, both industrial and precious metal ETPs saw record inflows last week buoyed by investor caution over fears rapid removal of quantitative easing in the US could derail the economic recovery.

Similarly, bullish momentum in commodities investing, despite a weakening dollar and the expectation of stimulus tapering by the Federal Reserve, helped money return to commodity ETPs.

Other bright spots included aluminium ETPs, which saw investors pile in as they anticipated cuts in Chinese production due to oversupply harming prices. Aluminium supply is up 4 percent over the past three months at near record highs.

Returning investor flows will offer some relief to the commodities sector, which saw outflows in July of $2.72 billion globally. Precious metals led the way with $2.19 billion, followed by energy at $223 million and agriculture at $175 million.

However, gold ETPs continued to haemorrhage assets with outflows of $189 million last week.

The market also witnessed profit taking in the copper and platinum group metal markets, as a consequence of the positive Chinese data, resulting in outflows from ETPs last week of $22.7 million and $34 million, respectively.

The market will continue to watch for further clarification around the tapering of monetary stimulus in the US, which relies on strong economic data.