Weekly Commodity ETF Flows Report: Traders Bet on Silver Top

by: Hard Assets Investor

by Sumit Roy

Fresh investor buying helped equity markets advance to new multiyear highs this past week, as the Federal Reserve signaled it would keep monetary policy accommodative for a while longer. Commodity exchange-traded products weren't left out of the buying spree; $750 million of new capital flowed into the space, helping send total assets to $179 billion.

But like last week, individual sector performance varied significantly. Once again, inflows were heavily tilted toward precious metals ETPs, in which investors added $682 million. The other sectors—including energy, broad market, industrial metals, and agriculture—didn't fare nearly as well, with net inflows of $122 million, $120 million, $12 million, and outflows of $186 million, respectively.

It's also worth noting that while inflows into precious metals ETPs totaled $682 million in the period, total assets rose by a more substantial $3.9 billion, thanks to capital appreciation from surging gold and silver prices.

Turning to individual products—unsurprisingly—precious-metals-related ETPs dominated, taking four of the top five spots for net inflows. Interestingly, however, the Energy Select SPDR Fund (NYSE Arca: XLE) was No. 1, with $370 million in inflows. We can likely attribute this to a modest reversal of some of the $1.7 billion in outflows the fund has seen over the past couple of weeks.

One fund that has received a lot of attention recently, ProShares UltraShort Silver (NYSE Arca: ZSL), found itself on the inflows list for a second week, as more and more traders attempt to time the top in silver prices. All told, $201 million of capital entered the fund, the week's third-highest total.

Also on the top creations list were the Market Vectors Gold Miners ETF (NYSE Arca: GDX), the PowerShares DB Precious Metals Fund (NYSE Arca: DBP) and the iPath Dow Jones-UBS Precious Metals Subindex Total Return ETN (NYSE Arca: JJP), with $207 million, $190 million and $118 million in inflows, respectively.

The outflows list this week was quite diverse. Ironically, the iShares Silver Trust (NYSE Arca: SLV) led with $189 million in outflows, as investors took profits. PowerShares DB Agriculture Fund (NYSE Arca: DBA), the United States Oil Fund (NYSE Arca: USO), the iPath Dow Jones-UBS Cotton Subindex Total Return ETN (NYSE Arca: BAL) and the United States Natural Gas Fund (NYSE Arca: UNG) followed with $129 million, $94 million, $85 million and $70 million in outflows, respectively. Incidentally, over the past month, investors have pulled over $900 million from the United States Oil Fund.

Taking a look at price performance for the week, silver ETPs dominated for a second week as the white metal rocketed to a record high. But the No.1 spot went to the Elements Credit Suisse Global Warming ETN (NYSE Arca: GWO), which rose by 13.84 percent. This, however, is a highly volatile product, so you shouldn't read too much into its movements.

The UBS E-TRACS CMCI Silver Total Return ETN (NYSE Arca: USV), ETFS Physical Silver Shares (NYSE Arca: SIVR), iShares Silver Trust (NYSE Arca: SLV) and PowerShares DB Silver Fund (NYSE Arca: DBS) followed, with returns of 9.17 percent, 7.14 percent, 7.12 percent and 7.01 percent, respectively.

Ag-related ETPs made up the bulk of the bottom price performers list this week. The iPath Dow Jones-UBS Cotton Subindex Total Return ETN (NYSE Arca: BAL) fell 9.64 percent as cotton prices plunged. The UBS E-TRACS CMCI Livestock Total Return ETN (NYSE Arca: UBC) fell 4.21 percent, and the iPath Dow Jones-UBS Softs Subindex Total Return ETN (NYSE Arca: JJS) dropped 3.98 percent.