New all time high in gold holdings of ETF Securities

February 17, 2009

Commodity Online
LONDON: The gold holdings of ETF Securities physically-backed gold ETCs rose by 62,083 ounces last week to 7.0mnounces - a new all time highs, with ETFS Physical Gold (PHAU) and Gold Bullion Securities (GBS) seeing the largest inflows.

Investors have been aggressively adding physical gold to their portfolios as concerns about counterparty risk –both private and public - rise and investors’ hedge against the risk of currency depreciation and longer term inflation risks as government debt projections balloon and an increasing number of central banks move towards quantitative easing. The gold price has risen over 31% in USD since the middle of November, ETF Securities said in a report.

There has also been a surge in demand for palladium and platinum, with ETFS Physical Palladium (PHPD) seeing an increase of 51,897 ounces last week, a rise of 28% to 235,000 ounces. Platinum also saw strong inflows, with ETFS Physical Platinum (PHPT) holdings rising by 9% to 208,163 ounces.

Platinum and palladium appear to be benefitting from the renewed interest in precious metals as investors search for hard assets to hedge against global financial risks and from a more general rebound in cyclicallyoriented commodities over the past few months. Palladium, which historically has had a high correlation to platinum, may also be doing some catch-up to platinum which is now trading near five month highs.

Oil ETCs continued to see very strong inflows last week, with flows into all long oil ETCs rising by $183mn, bringing total inflows since the beginning of November to $1.1bn, more than any other commodity – including gold.

The biggest flows are going into ETFS Crude Oil (CRUD), ETFS Brent (OILB) and ETFS WTI (OILW). ETFS Leveraged Crude Oil (LOIL) has seen more inflows than any other leveraged ETC this year, with flows rising by $19mn last week and total inflows up $86mn since the beginning of the year.

Agriculture has been getting substantially more attention recently, with trading volumes in ETFS Agriculture (AIGA) rising to a new high, trading more than $60mn last week. So far this year agriculture ETCs have seen inflows of $120mn, with $70mn going into the broad ETFS Agriculture (AIGA) and ETFS Wheat (WEAT) receiving nearly $20mn of inflows. Agriculture has been benefiting from its historic low correlation to key business cycle indicators and perceived positive long term fundamentals.

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