Investors shift from gold to industrial metals

Steel factoryExchange-traded product (ETP) flows suggest investors expect a boost for cyclical commodities such as industrial metals at the expense of gold and silver.

The figures from investment firm ETF Securities, for the week ending April 10, found a net outflow of $41 million (€30 million) from precious metals ETPs while industrial metals products took in a net $23 million.

Investors typically buy gold and silver as “safe haven” assets in times of economic distress, while industrial metal prices are assumed to move in line with growth in the manufacturing sector.

“In our view, industrial metal prices have now fully adjusted to expected increases in supply and concerns over a slowdown in the Chinese economy are overblown, with authorities committed to growth of around 7-8%,” says a report by Nicholas Brooks, head of research and investment strategy, and Nitesh Shah, associate director, research, ETF Securities.

ETPs that track the price of platinum were especially popular, attracting a net inflow of $38 million during the week, amid concerns that ongoing strikes in South Africa were leading to a shortage.

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