Advanced Global Trading | AGT Emission Trading Permit | Dubai: Gold investors are switching to ETPs (Emission Trading Permit), said a global CO2 market leader, predicting up to 25 per cent returns for the ‘ethical’ commodity in 2012.
Charles Stephenson, managing director of Dubai-based Advanced Global Trading (AGT), a global leader in the verified CO2 market, said he has witnessed floods of investors in the first quarter of 2012 who have pulled positions out of gold in order to increase the number of Verified Emission Trading Permit (ETPs) in their portfolio.
“We’ve seen an increasing number of clients opening accounts with AGT selling increasingly shaky gold positions to buy into the verified CO2 market, largely because all investors who have traded with us have made a profit - some as high as 38 per cent within 18 months,” Stephenson said.
“News of these returns has spread through referrals from clients to friends, family, colleagues and we now generate a large number of new accounts through our existing clients on a weekly basis.”
Investors had relied upon gold as a safe haven during last year’s debt crisis, sending prices to an all-time high of around $1,920 an ounce towards the end of 2011. But this year, gold has been trading more like a commodity that moves in the opposite direction to the US dollar.
Gold continues to perform poorly despite a recent mini price recovery during the first week of June, due to a retreat in the dollar against a basket of major currencies, prompting buying and taking the metal above $1,600 an ounce - up from $1,540 in May 2012.
Gold has retreated significantly from last year’s record highs and there is uncertainty as to where the market will go next, where ETPs are driven by market supply and demand differentials and are uncorrelated to other financial markets.
Traditionally seen as safe, gold has fallen victim to a wave of sell-offs across risk assets, as the political turmoil in Greece threatens insolvency and an exit from the Euro.
“We have numerous clients who have reduced or sold their gold positions to increase their carbon position in large quantities, given the average opening balance across our clients is $36,000 with an average balance overall of around $150,000 and a significant number of our clients trade up to $5 million,” Stephenson added.
“Demand in the verified carbon market remains buoyant, with various companies increasing their commitment to reduce their CO2 footprint, such as Unilever, Microsoft and the Lotus F1 Team, keeping prices moving upward. We are predicting 20-25 per cent returns for 2012, building on the 8.6 per cent year to date already achieved for our investors and most clients who have seen positive returns from the market and perhaps dipped their toe initially have now increased their positions.”
General Motors announced in November 2010 that it was to buy $40million from the verified ETP market over three to five years, which had a positive effect on both market sentiment and pricing, with VCU prices rising by 3 per cent as supply was reduced in the market.
“Gold fell by over 15 per cent over recent months, so it’s no surprise investors are looking at alternative commodities and ETP investors have also increased their confidence since we recently launched the first iPhone app to allow clients to monitor their verified ETP investment on the move, which also allows their financial advisors to supervise their account,” Stephenson said.