Net flows into ETF Securities’ physically-backed precious metals exchange-traded commodities surged over 400 per cent in quarter one 2009 compared to quarter four 2008 – the most rapid
Net flows into ETF Securities’ physically-backed precious metals exchange-traded commodities surged over 400 per cent in quarter one 2009 compared to quarter four 2008 – the most rapid pace of growth on record.
This brings total precious metals holdings to a new high of USD6.8bn.
Physically-backed gold ETCs saw the largest flows, with total ounces held by ETFS Physical Gold and Gold Bullion Securities rising by 1.3mn ounces (USD1.1bn) to 7.4mn oz (USD6.5bn). Inflows during 1Q09 increased at 3.7 times the pace of inflows during 4Q08 – the largest quarterly increase on record.
ETF Securities’ gold ETCs now hold more gold than any other gold ETF/ETC in Europe, and the second largest in the world. During the quarter the gold price initially surged through USD1,000 per ounce, before falling back as investor risk appetite increased, ending the quarter up 5.9 per cent in USD terms, 8.0 per cent in GBP, 11.7 per cent in EUR.
ETFS Physical Silver saw inflows accelerate rapidly in 1Q09, rising by 4.8 times the pace of inflows in 4Q08. Historically the silver price has often acted as a leveraged play on the gold price, having a high correlation with the gold price due to its safe haven properties, but having a much higher volatility. Total silver holdings increased by USD3.0m oz in 1Q09, rising to 17.3m oz, equivalent to USD212mn at the current price. Silver was one of the best performing commodities in 1Q09, rising by 22 per cent over the period.
Flows into ETFS Physical Platinum grew at the fastest pace during the quarter, with total platinum holdings rising 82 per cent compared to end-2008 levels. Total platinum holdings stood at 309,930 oz at the end of 1Q09, equivalent to USD372mn at current prices. The platinum price surged 25 per cent in the first three months of the year, the strongest performer among the precious metals, benefiting from its safe haven status as a precious metal as well as from improved sentiment towards commodities with industrial applications.
ETFS Physical Palladium also saw inflows surge during the quarter with total palladium holdings rising 48 per cent compared to end 2008 levels. Total palladium holdings at the end of 1Q09 stood at 251,939 oz, USD59m at current prices. The palladium price rose by 17 per cent during the quarter.
ETFS Physical PM Basket, which is backed by a basket of allocated precious metals (with a weighting of 43 per cent gold, 25 per cent silver, 20 per cent platinum and 12 per cent palladium), saw total holdings in 1Q09 rise by 33.7 per cent compared to the end of last year, as investors sought exposure to a diversified basket of precious metals. It performed strongly during the quarter, rising by 12.7 per cent, its largest quarterly increase since 1Q08.
Nicholas Brooks, head of research and investment strategy at ETF Securities, says: “The surge of inflows into physically-backed precious metals ETCs in the first quarter is unprecedented and reflects investors’ concerns about current highly uncertain economic and financial conditions. Credit and counterparty risk are now major issues for most investors and the security of holding liquid investments that are fully backed by allocated precious metals is a major factor driving these flows. With major central banks aggressively expanding the money supply through quantitative easing and government fiscal deficits and debt rising at an extremely rapid pace, investors are looking for assets that will hold their value if currencies depreciate or there is a sharp rise in inflation. ETFS Physical Gold and Gold Bullion Securities have seen record quarterly inflows, but our physically-backed silver, platinum and palladium ETCs have also seen substantial inflows.”
