Gold Flows Out, Silver Flows In. Strategic ETF and ETC Changes

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Given the relative price falls in gold and silver since mid-July (down by 19% and 38% respectively as of September 9th) and the fact that silver is typically much more volatile than gold, it follows that some speculators and investors are positioning themselves for an upturn in the sector by increasing their silver exposure.

As far as recent flows of funds are concerned, ETF Securities has reported that after ten consecutive weeks of inflows, the ETFS Physical Gold (symbol PHAU) instrument saw $240m of outflows in the week to 5th September. This largely reflected a large redemption order from one market maker who was reducing a build-up of inventory. The flows into the long silver ETCs, though, increased by $11M, taking total inflows over the four weeks to $28M, while ETFS leveraged silver net creations are up by $26M since listing since March, making this instrument the third most popular ETC.

Given the relative price falls in gold and silver since mid-July (down by 19% and 38% respectively as of September 9th) and the fact that silver is typically much more volatile than gold, it follows that some speculators and investors are positioning themselves for an upturn in the sector by increasing their silver exposure. This has happened before during this year, and has not necessarily worked, but the fundamental analysis of the markets suggests that it is only a matter of time.

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