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Gold and oil ETCs start 2009 on a strong note, says ETF Securities

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In the week ending 2 January 2009, investors bought nearly USD35m of physically backed gold exchange traded commodities and over USD30m of long oil ETCs, bringing aggregate net inflows

In the week ending 2 January 2009, investors bought nearly USD35m of physically backed gold exchange traded commodities and over USD30m of long oil ETCs, bringing aggregate net inflows to levels 60 per cent and 466 per cent above one year ago.

ETF Securities says ETFS Physical Gold saw the largest flows of all ETCs, rising by USD42m during the week. ETFS Physical Gold has seen USD157m of inflows over the past month and nearly USD1.2bn over the past 12 months, making it the most popular ETC over the past year.

Of the oil ETCs, ETFS Brent received the most flows last week with an increase of USD13m. ETFS Crude Oil saw nearly USD10m of inflows.

Even ETFS Leveraged Crude, which moves twice the daily percentage change in the underlying asset, saw USD5m of inflows last week, the largest of any leveraged ETC.

ETF Securities says the turnaround in energy positioning over the past two months has been especially pronounced. Between August and October investors were reducing their holding of long energy ETCs as the oil price fell from a peak near USD150 per barrel to below USD50. However, as the oil price dropped below the USD40 level, investors have begun to aggressively build long positions.

At the same time, flows into short energy ETCs (particularly ETFS Short Crude Oil), which built rapidly in the April-July 2008 period as the oil price surged, have fallen back sharply. The net result is that net long positions in energy ETCs are now the highest they have ever been.

Overall, net flows into ETCs have been rising now for eight consecutive weeks, indicating that investors are becoming increasingly positive on the outlook for commodity prices – particularly oil and gold.

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