ETFS – Gold ETPs See Largest Inflows in a Month as Sovereign Risk Surges on Portugal Downgrade to Junk and Italy Contagion

– Physically-backed gold ETCs see largest inflows in a month. Gold saw inflows of $56mn last week, the only precious metal to experience a rise in inflows. Further deterioration of the Eurozone sovereign environment likely drove the inflows, with Portuguese debt downgraded to junk status by Moody’s Investor Services and fiscal concerns pushing up Italy’s sovereign bond spreads. There is growing concern that Greece will be allowed to default on some of its debt and investors are increasingly concerned about the implications for other European sovereign and bank bond values. This will likely be a key focus of markets again this week.

– Agriculture ETPs see over $100mn of inflows over past 5 weeks. Investors continue to increase exposures to ETF Securities’ agriculture ETPs, with inflows for the fifth consecutive week, totalling over $100mn over the period. AIGA received $8.6mn last week. Consistent flows into the broad basket agriculture ETP, ETFS Agriculture (AIGA), shows evidence of a continued desire by investors to diversify traditional portfolio holdings of correlated risk assets like equities. Wheat ETPs have also continued to experience strong inflows as poor growing conditions have adversely affected the pace and quality of the US harvest and sharply lower prices attract buyers. LWEA received over $16.6m, the largest net weekly inflow on record, while ETFS Wheat (WEAT) received $9.7mn in net inflows.

– ETFS Forward Industrial Metals (FIND) receives record $17.3mn inflows last week. Not only have investors’ added to industrial metals positions in record volumes, but have also reduced positions in short industrial metal ETP’s indicating some investors’ are anticipating a recovery in global economic activity later this year. ETFS Short Industrial Metals (SIME) saw near record outflows, amounting to $6.3mn last week.

– Oil exposures reduced as investors’ boost natural gas longs. Investors added over $10mn to natural gas exposures last week on the back of substantial price declines, with ETFS Leveraged Natural gas receiving the lion’s share – $9.5mn. ETFS Crude Oil ETPs saw outflows of $28.3mn, as oil prices rose toward the top of recent ranges.