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Silver outshines gold, reports ETF Securities

Silver outshines gold, reports ETF Securities

Tue July 25 2017

 

Flows analysis by ETF Securities for the week beginning 17 July 2017 shows that silver was the precious metal of choice for investors as silver ETPs recorded inflows of $17 million compared to outflows of $29m seen by gold ETPs.

 

Nitesh Shah, director, commodity research at ETF Securities, commented: “With continued economic strength, investors have sided with silver as it has higher upside potential in periods of cyclical growth. While we believe that gold will end Q2 2018 roughly flat at today’s levels, silver could rise more than 10% and bring the elevated gold to silver ratio back down closer to historical average levels.

 

“We believe that upside inflation surprises will benefit both metals, but with greater industrial usage and continued mine supply deficit, silver is better positioned at this point of the economic cycle.”

 

ETF Securities offers the ETFS Physical Silver (LON: PHAG) which has assets under management (AUM) of $1.0 billion and a management expense ratio (MER) of 0.49%.

 

In a further sign that investors are getting more optimistic about cyclical assets, particularly those exposed to commodities, flows into commodity FX baskets were $8m during the week.

 

“Following an increase in policy rates by the Bank of Canada, the Canadian dollar jumped to the highest level in 13 months, which could signal that underlying oil demand is recovering,” observed Shah. “The Norwegian krone has also appreciated to a nine-month high as the recent rally in oil prices has lifted the currency.”

 

Elsewhere in the commodity space, industrial metal basket ETPs saw $13m inflows to record a fourth consecutive week of inflows. A raft of upside surprises in Chinese data releases last week continued the positive momentum for industrial metals prices as Chinese industrial production, retails sales and GDP all beat analysts’ expectations.

 

Shah commented, “China is the largest consumer of industrial metals and continued growth in its economy indicates that its demand of these commodities is unlikely to abate. We remain positive on Chinese economic growth at least until the end of this year as the country aims to maintain an even keel in the run-up to the 19th National Congress of the communist party.”

 

Investors looking for industrial metals exposure could try the ETFS Industrial Metals (LON: AIGI) which has AUM of $332m and an MER of 0.49%.

 

Other notable flows for the week included robotic and cyber security ETPs which saw inflows of $7m and $6m respectively. “In the past year, robotic themed equities have returned close to 39%, while cyber security themed equities have returned close to 21%,” said Shah.

 

Source: https://www.etfstrategy.co.uk/