Financial markets were affected by macroeconomic developments and geopolitical tensions last week. Sovereign crisis in peripheral European economies continued to weigh on the euro and triggered widening in yield spreads between peripheral bonds and German bunds. Risks of contagion spread to Portugal, Spain and Italy although financial ministers approved an 85B euro bailout package for Ireland. Tensions between North and South Korea intensified after South Korean military reported that North and South Korea exchanged military fire last Tuesday. Surprisingly, physical holdings in precious metal ETFs did not spike last week and with the exception of palladium ETF, total holdings in gold, silver and platinum ETFs fell over the reporting week. In our opinion, this was driven by liquidations'of previous purchases, rather than lack of market interests in these ETFS.

Investment in gold ETFs fell -63.70K oz, or +0.10%, to 65.98M oz in the week ended November 26. During the week, spot gold prices climbed +0.82% while benchmark gold futures gained +0.75%. SPDR Gold Trust, which represents 62.62% of global ETF holdings, posted a net decline of -136.71K oz last week, taking the year-to-date investment to 4.87M oz and the combined holdings to 41.32M oz. Other funds showing redemptions were ZKB Gold ETF, Julius Baer Physical Gold Fund and New Gold Trust. ETFS (London) and iShares Comex Gold Trust, representing 6.52% and, 5.22% of total gold ETF holdings respectively, gained +974.30K oz and +890.62K oz respectively during the week.

For silver, ETF investments slid 2.29M oz, or -0.41%, to 550.40M oz last week. During the week, spot silver and silver futures prices plunged -2.42% and -1.77% respectively. Note that holdings in iShares Comex Gold Trust soared to a record high of 3.44M oz on November 24.

iShares Silver Trust, representing +62.57% of global silver ETFs, dropped -3.32M oz during the week, taking the year-to-date investment to 39.17M oz and the combined holdings to 344.37M oz. Redemptions were also seen in ZKB Silver ETF and Julius Baer Physical Silver Fund. The 2 gainers last week were ETFS (London) and ETF (US). Both added more than 2% of holdings to the funds. Silver holdings rose 85.53M oz since the beginning of the year, sending total holdings to 550.40M oz.

Investment in platinum ETFs fell -7.00K oz, or -0.63%, to 1.11M oz, outperforming the decline in platinum prices. 2 out of 5 ETFS recorded losses, 1 recorded gain and the rest showed no change during the week. Julius Baer Physical Platinum fund lost -7.60K oz while ZKB Platinum ETF lost 0.72K oz. ETFS (London) was the only ETF showing gains in platinum holdings last week but the amount was too small to offset redemptions.

Palladium ETFs recorded an increase of +24.74K oz, or +1.26%, taking total holdings to 1.98M oz. ETFS(London) added +22.55K oz while Julius Baer Physical Palladium Fund gained +2.35K oz. ZKB Palladium ETF was the only fund that recorded redemption during the week.