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Growing demand for physical precious metal ETCs

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London-based ETF Securities says it is seeing ‘explosive growth’ in its five physical precious metal exchange traded commodities (ETCs), having seen total assets under management grow to U

London-based ETF Securities says it is seeing ‘explosive growth’ in its five physical precious metal exchange traded commodities (ETCs), having seen total assets under management grow to USD 800 million from USD 65 million six months earlier. This growth has far exceeded precious metal analyst forecasts.

Commenting on the response of investors for ETF Securities’ precious metal ETCs, Nik Bienkowski, Head of Listing and Research, says, ‘There has been significant increase in demand for ETCs linked to the price of commodities and particularly precious metals. Most recently, this demand has been for platinum and silver ETCs as investors seek to diversify their portfolios away from equities and bonds and into other asset classes.

‘Many independent studies have shown that precious metals have low to negative correlation with equities and importantly, in times of stress, this low correlation is shown to hold. Overall there has been a huge surge in global demand for ETCs with over USD 33 billion invested in the last three years, with approximately two-thirds 70% (USD 23 billion) invested in precious metals.’

ETF Securities created the world’s first ETC in 2003.  More recently ETF Securities has launched a number of new products including over 40 ETCs tracking DJ-AIG Commodity Indices, 10 ETCs tracking oil prices and five ETCs tracking physical precious metals. 

Due to significant investor demand for simple access to commodities and more recently precious metals, all five physical precious metal ETCs have been listed on five European exchanges including the London Stock Exchange, Deutsche Borse, Euronext Amsterdam, Euronext Paris and Borsa Italiana.  This demand has also been a result of investors wanting to diversify their investment portfolio into other asset classes which exhibit low correlation to equities and bonds.

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