The flow of investments out of commodities slowed down
sharply in March to a net $2.6bn from $4bn in February. The main reason for
this slowdown was a halving in the value of funds withdrawn from precious
metals ETPs to $2.6bn.
Inflows to commodity indices stayed positive but at just
$200m, were a long way below the February total of $1.4bn, while there was a
small pickup in commodity structured products, which saw $320m of new issuance.
The driving force behind outflows of commodity
investments is the phase of rapid liquidation that has hit gold ETPs. Indeed,
in light of this rapid liquidation, the stability in total commodity investment
AUMs is notable.
At $409bn, the March total fell by just $1bn from the
prior month with the modest inflow s into other commodity assets, plus some
minor price appreciation, sufficient to offset the negative gold flows. March
was the seventh successive month that commodity AUM has totaled over $400bn.
The question of course is whether this stability in the
overall picture for commodity investments will continue? What happens in gold
will go a long way to determining that. Although the data is not yet available
to estimate April flows for all the sectors we cover, it is clear that gold
liquidation has accelerated again.
Around 50t of gold ETP holdings were liquidated in March,
but the rate of liquidation has picked up substantially again in April with
almost 170t sold thus far.
Sales could continue at high levels. The 360t of gold sales
from ETP so far this year equates to more than 50% of all the gold mined over
the same period but is less than 15% of total gold held in ETPs and so unless
investors regain their faith in gold soon, the prospects is for further heavy
outflows to come.
Not all of the precious metals suffered net outflows in
March, both platinum and silver recorded fresh interest. In tonnage terms,
metal held in trust across both of these commodities hit record highs. Other
markets did less well, however.
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