Commodity ETF Inflow/Outflow: Investors Pile Into Gold Miners…

| September 16, 2013 | 0 Comments

inflow-outflowNo doubt about it, the upcoming week is very important for commodity ETFs… 

With Ben Bernanke ready to update investors on the Fed’s tapering plans this Wednesday, investors spent much of last week adjusting their portfolio’s hard asset exposure.

Here’s where commodity ETF investors placed, and pulled, the most money for the week of June 13th

Leading Inflows:

On the top of the list for commodity ETF inflow is the Market Vectors Gold Miner Fund (GDX).  Nearly $600 million in assets were added to the GDX last week.  As you may know, this ETF is the go-to-choice for anyone bullish of gold mining stocks. 

What’s more, the Direxion Gold Miners Bull 3X (NUGT) added just over $105 million in assets.  NUGT is more risky due to its 3x leveraged nature, but will provide outsized returns should mining companies rally.

The rush into miners is interesting because the SPDR Gold ETF (GLD), which effectively tracks the price of gold, saw capital losses of $94 million. 

Judging by this peculiar development, investors appear more certain of a bottom in mining stocks than the price of gold. 

The third biggest commodity ETF inflow came from the US Natural Gas ETF (UNG) with $51 million.  With the fall and winter heating season right around the corner, this is one of the best seasonal periods to be bullish of natural gas.

Finally, the Powershares DB Agriculture (DBA), which tracks a slew of Ag related commodities, saw just over $40 million of inflows.  Clearly, investors are betting grain and soft commodities are overdue for a rally.  As you may know, it’s been a rough year for Ag related assets, with most at or near 52-week lows.

Leading Outflows:

Taking the top spot in capital outflows for the week is the Energy Select SPDR (XLE) at $125 million.  While this isn’t a commodity tracking ETF, it does track important oil producing companies like Exxon Mobil (XOM) and Chevron (CVX). 

Performance for XLE is fantastic, jumping 20% on the year.  But since the ETF is also trading near all time highs, investors are wise to take at least some of their profits to the bank.

The second largest outflows for the week came from the aforementioned SPDR Gold ETF (GLD).  With Federal Reserve Chairman Ben Bernanke most likely ready to start tapering operations this Wednesday, gold investors prepared by selling $94 million worth of GLD. 

It should come as no surprise that there’s a lot riding on Bernanke’s plan…

Next in line was the US Oil Fund (USO), which shed $86 million.  Now that the Syrian situation looks as though it may be settled through diplomatic means, oil bulls ran for the exits. 

As I’ve talked about many times in the past, WTI crude is blatantly overvalued at $108 a barrel and should trade much lower once the Syrian crisis is resolved.

Rounding out the top five commodity based ETF losers for the week are the SPDR S&P Oil and Gas Exploration and Production (XOP) and the iShares Global Energy (IXC).  These energy based ETFs lost $52 million and $32 million of assets under management respectively.

In a nutshell, investors sold commodity ETFs that will likely be hurt by the onset of tapering this week- gold and oil.  Oddly enough, they jumped into gold miners, which can only be explained by the extreme value apparent in that industry.

Stay tuned to Commodity Trading Research for more updates on important inflow/outflow data!

Until Next Time,

Justin Bennett

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Category: Commodity ETFs

About the Author ()

Justin Bennett is the editor of Commodity ETF Alert, an investment advisory focused on profiting from the ebb and flow of important commodities via ETFs. The commodity veteran and options specialist is also a regular contributor to the Dynamic Wealth Report. Every week, Justin shares his thoughts with our readers on a variety of commodity-related topics. Justin is also a frequent contributor to Commodity Trading Research’s free daily e-letter. And he’s the editor of another highly successful and popular investment advisory, the Options Profit Pipeline.