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Flows into ETF Securities’ Precious Metals ETCs Surge 400% in 1Q 2009,
breaking previous quarterly records
14/04/09
- Physical gold ETC holdings hit new all time high, with inflows occurring
at 3.7 times the pace of inflows during 4Q08
- Platinum ETC holdings rise 82% since end of December 2008
- Palladium ETC holdings up 48% in 1Q 2009
- Inflows into physical silver ETC rises at 4.8 times 4Q08 pace of inflows
during 4Q08, reaching a new all time high
Net flows into ETF Securities’ physically-backed precious metals Exchange Traded
Commodities (ETCs) surged over 400% in 1Q 2009 compared to 4Q 2008, the most
rapid pace of growth on record, bringing total precious metals holdings to a new high
of $6.8bn.
Physically-backed gold ETCs saw the largest flows, with total ounces held by ETFS
Physical Gold (PHAU) and Gold Bullion Securities (GBS) rising by 1.3mn ounces
($1.1bn) to 7.4mn oz ($6.5bn). 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 $1000
per ounce, before falling back as investor risk appetite increased, ending the quarter
up 5.9% in USD terms, 8.0% in GBP, 11.7% in EUR.
There has been a surge in demand for physically-backed gold ETCs since the third
quarter of 2008 as investors have become increasingly concerned about the financial
and economic outlook. Rising government fiscal deficits and debt, together with
recent moves by major central banks to commence quantitative easing has raised
investors’ concerns about the long-term inflation outlook and the potential for
competitive currency devaluations. Gold and other hard assets have often been one
of the most effective ways for investors to preserve wealth in this kind of
environment.
For similar reasons, ETFS Physical Silver (PHAG) 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 $3.0mn oz in 1Q09, rising to 17.3mn oz, equivalent to
$212mn at the current price. Silver was one of the best performing commodities in
1Q09, rising by 22% over the period.
Flows into ETFS Physical Platinum (PHPT) grew at the fastest pace during the
quarter, with total platinum holdings rising 82% compared to end-2008 levels. Total
platinum holdings stood at 309,930 oz at the end of 1Q09, equivalent to $372mn at
current prices. The platinum price surged 25% 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 (PHPD) also saw inflows surge during the quarter with total
palladium holdings rising 48% compared to end 2008 levels. Total palladium holdings
at the end of 1Q09 stood at 251,939 oz, $59mn at current prices. The palladium
price rose by 17% during the quarter.
ETFS Physical PM Basket (PHPM), which is backed by a basket of allocated precious
metals (with a weighting of 43% gold, 25% silver, 20% platinum and 12%
palladium), saw total holdings in 1Q09 rise by 33.7% compared to the end of last
year, as investors sought exposure to a diversified basket of precious metals. PHPM
performed strongly during the quarter, rising by 12.7%, its largest quarterly increase
since 1Q08.
There has been strong demand for physical metal ETCs because they are backed
100% by allocated metal in a vault. In addition, high liquidity, ease of access, no
premiums due to shortages (as has been seen for coins and bars in many instances),
and of course their safety and ease of storage.
ETF Securities’ physically backed precious metals ETCs are all backed by “allocated”
bullion – uniquely identifiable bars which carry no bank credit risk. The precious
metal bars are held by the Custodian HSBC Bank USA N.A., the world’s leading
Custodian for ETCs. The metal held with the Custodian must conform to the rules for
Good Delivery of the London Bullion Market Association (LBMA). Securities are only
issued once metal is confirmed as being deposited into each Issuer’s bullion account
with the Custodian. Consistent with allocated bullion, no precious metal is borrowed,
loaned out nor does it earn any income. Last year, ETF Securities obtained Sharia
compliance, and the related certificate, for its physically backed precious metals
platform issued by ETFS Metal Securities Limited.
ETF Securities now offers more than 130 ETCs with over $10 billion in assets. The
ETCs provide investors with a wide variety of investment strategies, with ETCs
offering physical, long, forward, leveraged and short exposure to all commodity
sectors. ETCs are simple to access as they are traded in four currencies (EUR, USD,
GBP and AUD) and listed on six major exchanges globally including the London Stock
Exchange, NYSE-Euronext Paris, NYSE-Euronext Amsterdam, Deutsche Börse, Borsa
Italiana and the Australian Securities Exchange.
Nicholas Brooks, Head of Research and Investment Strategy at ETF
Securities commented:
“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.”
For further information, please contact:
Laura Stevens
Tel: +44 (0) 20 7448 4351
Email: laura.stevens@etfsecurities.com
ETF Securities continues its series of conference calls for finance
professionals:
Gold, Silver, Industrial Metals and PGMs: Investment Characteristics and
Outlook
Date: 16th April 2009
Time: 11:00am and 15:00pm London Time
Nicholas Brooks, Head of Research and Investment Strategy, ETF Securities Ltd
This call will discuss:
- The macro context
- Investment Characteristics of Gold and Base Metals
- Fundamental Drivers of Precious and Base Metals
To register your place today:
www.etfsecurities.com/en/events/etfs_events_calls.asp
Notes to Editors:
ETF Securities Ltd is a provider of Exchange Traded Commodities (ETCs) and
Exchange Traded Funds (ETFs). ETF Securities is independently owned and is the
European market leader in ETCs. The management of ETF Securities pioneered the
development ETCs, with the world's first listing of an ETC, Gold Bullion Securities in
Australia and London in 2003 and then the world's first entire ETC platform which
was listed on the London Stock Exchange in September 2006.
To learn more about ETF Securities go to: www.etfsecurities.com
This press release does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of
any offer to purchase or subscribe for, any securities (together the "Securities")of ETFS Commodity Securities
Limited, ETFS Metal Securities Limited or ETFS Oil Securities Limited or any other shares or securities, nor shall it
or any part of it nor the fact of its distribution form part of or be relied on in connection with any contract or
investment decision relating thereto. Any offer, invitation or solicitation shall be made solely by means of the
relevant prospectus (plus any supplements thereto) in the case of the Securities or the prospectus together with
the relevant sub-fund supplement in the case of the Shares (in each case the "Prospectus") and recipients of this
advertisement who are considering a purchase of Securities or Shares following distribution of the Prospectus are
reminded that any such purchase should be made solely on the basis of the information contained in such
Prospectus. This advertisement does not constitute any recommendation regarding the Securities or the Shares.
The communication of this press release is not being made by, and this press release has not been approved by,
an authorised person for the purposes of section 21 of the Financial Services and Markets Act 2000 (the "FSMA").
Accordingly this press release is not being distributed to, and must not be passed on to, the general public in the
United Kingdom. The communication of this press release or any other document issued in connection with the
offer and sale of the Shares or Securities is only being made to and directed at those persons in the United
Kingdom falling within the definition of Investment Professionals (as defined in Article 19(5) of the Financial
Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order"), or high net worth entities, and
other persons to whom it may otherwise lawfully be communicated, falling within Article 49(1) of the Order or
any person to whom it may otherwise lawfully be made (all such persons together being referred to as "relevant
persons"). The communication of this press release (or any other document issued in connection with the offer
and sale of the Shares or Securities) must not be acted upon or relied upon by persons who are not relevant
persons. The Fund is a collective investment scheme for the purposes of the FSMA and is a recognised scheme for
the purposes of the FSMA. Persons distributing this press release must satisfy themselves that it is lawful to do
so. All applicable provisions of the FSMA must be complied with in respect of anything done in relation to the
Shares or Securities in, from or otherwise involving the United Kingdom.
This is not an offer of securities for sale in the United States. The Shares and Securities have not been and will
not be registered under the US Securities Act or any other applicable law of the United States. The Shares and
Securities are being offered and sold only outside the United States to non-US persons in reliance on the
exemption from registration provided by Regulation S of the US Securities Act. None of ETFS Commodity
Securities Limited, ETFS Metal Securities Limited, ETFS Oil Securities Limited each an "Issuer") has been or
intends to become registered as an investment company under the United States Investment Company Act of
1940 (as amended) (the "Investment Company Act") and related rules. Neither the Shares nor the Securities or
any beneficial interest therein may be reoffered, resold, pledged or otherwise transferred in the United States or
to US persons. If an Issuer determines that any holder of shares is a US Person or any holder of Securities is a
Prohibited US Person (being a US Person who is not a "qualified purchaser" as defined in the Investment
Company Act), the Issuer may redeem the Shares or Securities (as the case may be) held by that Security
Holder in accordance with the provisions described in the Prospectus. Neither the Shares nor the Securities may
be purchased with plan assets of any "employee benefit plan" within the meaning of section 3(3) of the United
States Employee Retirement Income Security Act of 1974, as amended ("ERISA"), any "plan" described in section
4975(e)(1) of the United States Internal Revenue Code of 1986, as amended (the "Code") or any entity whose
underlying assets include "plan assets" of any of the foregoing by reason of an employee benefit plan's or other
plan's investment in such entity, which employee benefit plan, plan or entity is subject to Title I of ERISA or
section 4975 of the Code or any United States Federal, state, or local law or non-United States law that is
substantially similar to the prohibited transaction provisions of section 406 of ERISA or section 4975 of the Code
(any such employee benefit plan, plan or entity, a "Prohibited Benefit Plan Investor"). If the Issuer determines
that any Security Holder is a Prohibited Benefit Plan Investor, the Issuer may redeem the Securities or
Shares held by that person in accordance with the provisions described in the relevant Prospectus.
"Dow Jones," "AIG®" "Dow Jones-AIG Commodity IndexSM," "DJ-AIGCISM", "Dow Jones-AIG Commodity 3-Month
Forward Index" are service marks of Dow Jones & Company, Inc. and American International Group, Inc.
("American International Group"), as the case may be, and are licensed for use for certain purposes by ETF
Securities Ltd. ETCs based on the DJ-AIGCISM or related sub-indices (including single commodity sub-indices) or
3-Month Forward Indexes are not sponsored, endorsed, sold or promoted by Dow Jones, AIG Financial Products
Corp. ("AIG-FP"), American International Group, or any of their respective subsidiaries or affiliates, and none of
Dow Jones, AIG-FP, American International Group, or any of their respective subsidiaries or affiliates, makes any
representation regarding the advisability of investing in such product(s).
ETF Securities Limited, ETFS Commodity Securities Limited, ETFS Metal Securities Limited, ETFS Oil Securities
Limited, Gold Bullion Securities Limited are each regulated by the Jersey Financial Services Commission
To obtain a copy of the prospectus please visit the website at www.etfsecurities.com
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