etfs aluminium (lse: alum) - etf securities pm-23-08-2013.pdf · 26 august 2013 for investment...

26 August 2013

For investment professional use only, not for public dissemination - Past performance does not guarantee future results. 1

Precious Metals Weekly

Precious Metal Prices1

USD/oz Gold Silver Plat. Pall.

Level 1,377.5 23.1 1,538.0 752.0

Change Gold Silver Plat. Pall.

-1 Week 0.6% 1.0% 0.9% -1.3%

-1 Month 3.3% 14.3% 8.0% 2.5%

-3 Months 1.2% 2.8% 5.6% 1.5%

-YTD -16.9% -23.0% 0.7% 6.8%

-12 Months -17.2% -23.9% -0.1% 17.9% 1 Based on August 23, 2013 London fixing price.

Source: Bloomberg.

Mike McGlone, CFA, FRM Director – Research US Nicholas Brooks Head of Research and Investment Strategy [email protected]

Have Gold and Silver Prices Already Discounted

Fed Tapering?

Gold and silver rise despite spike in US bond yields and stronger dollar. The silver price rose 1.0% last week, bringing gains over the past 8 weeks to 27%. The gold price also rose, bringing the total increase to 14% since its 5 July low. While the spike in US bond yields is pressuring many financial assets, precious metals took the latest release of the Fed’s FOMC minutes in stride, ignoring the Fed’s statement that it is “broadly comfortable” with moving ahead with reductions in bond buying in the near future. The fact that both gold and

silver prices ended the week higher indicates that the start of Fed tapering has largely been priced in to precious metals prices. U.S. 10yr yields and the gold price are now trading more or less around the same levels they were in November of 2010, when QEII was first announced. The 2013 correction in precious metals prices has attracted substantial physical demand, notably strategic buying by China. This demand surge, combined with a sharp decline in recycled gold supply and diminishing mining productivity, appears to be forming a solid foundation for the gold price.

September - the best month for gold. September has historically been the best month for gold investors (see chart below). Notably due to buying in advance of the Diwali festival in India, since 1990 the gold price on average has gained about 3% in the month of September (+2.5% if measured since 1972).

Another record demand indicator – silver ETF holdings reach a new high. Demand records continue to accumulate, including: an unprecedented period of negative gold swap and forward rates, the longest period of gold futures backwardation in history, record physical gold demand from China, record US Mint silver coin sales and most recently, a new record high in total silver ETF holdings. Total silver ETF holdings reached a record of 644Mn ounces as of August 21, representing about 83% of 2012 total mine supply. According to the World Gold Councils’ latest quarterly report, net gold demand from India and China in 2013 is likely to exceed 30mn ounces, respectively, representing a new high from China. Putting this in context, total gold mining supply in 2012 was about 87mn ounces, thus India and China demand alone is expected to equal nearly 70% of total

annual mine supply. Despite increased restrictions on India’s gold and silver imports and a new historic low value for the Rupee, Indian demand is expected to remain robust.

Increasing global GDP improves underlying support for PGMs. In the latest sign of improving global economic conditions, stronger than expected Chinese manufacturing data helped to support industrial-intensive platinum and palladium

prices. Recent Chinese platinum import data indicated a YOY increase of 20%. Chinese jewellery demand is the single largest category of platinum demand, just ahead of European auto catalyst demand. Europe appears to have exited the longest recession in post WWII history, which should help sustain platinum prices above the recently breached US$1,500/oz. level.

-1.0%

0.0%

1.0%

2.0%

3.0%1972 - 2013 1990 - 2013

Source: ETF Securities, Bloomberg

Spot Gold Average Monthly Returns, Since 1972 and 1990

mailto:[email protected]

26 August 2013


Equities (% ∆, Local) Level 1 week 1 Mth 3 Mth 12 Mth

S&P 500 1,661 0.3% -1.9% 0.6% 18.4%

Eurostoxx 50 2,825 -1.0% 3.8% 1.7% 16.3%

FTSE 100 6,500 0.0% -1.5% -2.9% 12.5%

MSCI EM 922 -3.7% -4.8% -10.1% -5.3%

Interest Rates (% p.a.) Level 1 week 1 Mth 3 Mth 12 Mth

Euro Libor 0.2% 0.2% 0.2% 0.2% 0.3%

US Libor 0.3% 0.3% 0.3% 0.3% 0.4%

GBP Libor 0.5% 0.5% 0.5% 0.5% 0.7%

JPY Libor 0.2% 0.2% 0.2% 0.2% 0.2%

US 10 Year Treasury 2.8% 2.8% 2.5% 2.0% 1.7%

UK 10 Year Gilts 2.7% 2.7% 2.3% 1.9% 1.6%

German 10 Year Bunds 1.9% 1.9% 1.6% 1.4% 1.4%

Japan 10 Year JGB 0.8% 0.8% 0.8% 0.9% 0.8%

Greece 10 Year 10.0% 9.6% 10.2% 8.8% 23.7%

Portugal 10 Year 6.5% 6.4% 6.4% 5.4% 9.4%

Ireland 10 Year 4.0% 3.9% 3.8% 3.5% 8.2%

Spain 10 Year 4.5% 4.4% 4.7% 4.3% 6.3%

Italy 10 Year 4.3% 4.2% 4.4% 4.0% 5.7%

Foreign Exchange (% ∆) Level 1 week 1 Mth 3 Mth 12 Mth

EUR/USD 1.34 0.5% 1.4% 3.5% 6.5%

USD/JPY 98.6 1.1% -1.1% -3.3% 25.6%

GBP/USD 1.56 -0.3% 1.3% 3.1% -1.8%

USD/CHF 0.92 -0.6% -1.6% -4.8% -3.6%

AUD/USD 0.90 -1.7% -2.6% -7.5% -13.7%

USD/CNY 6.12 0.1% -0.3% -0.2% -3.6%

EUR/GBP 0.86 0.8% 0.0% 0.5% 8.5%

EUR/CHF 1.23 -0.1% -0.3% -1.4% 2.7%

US TWI 69.8 0.6% -0.1% -1.6% 3.6%

Commodities (% ∆) Level 1 week 1 Mth 3 Mth 12 Mth

Gold ($US/oz) 1,378 0.6% 3.3% -0.2% -17.3%

Silver ($US/oz) 23.1 1.0% 14.3% 2.6% -23.9%

Platinum ($US/oz) 1,538 0.9% 8.0% 5.7% -0.1%

Palladium ($US/oz) 752 -1.3% 2.5% 1.8% 17.9%

Copper ($US/tonne) 7,292 -1.1% 3.8% 0.3% -5.0%

Oil ($US/barrel) 111.0 0.5% 2.4% 8.3% -3.5%

Corn ($US/bushel) 496 4.7% -5.1% -25.1% -38.7%

DJ-UBS CI Index (TR level) 262 0.4% 0.3% -1.8% -10.8%

Inflation (%) Level 1 week 1 Mth 3 Mth 12 Mth

US 2.0% n.a. 1.8% 1.1% 1.4%

EU 1.6% n.a. 1.6% 1.2% 2.4%

UK 2.8% n.a. 2.9% 2.4% 2.6%

Japan 0.4% n.a. 0.0% -0.6% -0.8%

China 2.7% n.a. 2.7% 2.4% 1.8%

Growth Indicators Level 1 week 1 Mth 3 Mth 12 Mth

ECRI Weekly US Indicator (level)* 122.8 n.a. 122.8 122.8 122.8

US ISM Manufacturing (level) 55.4 n.a. 50.9 50.7 50.5

German IFO (level) 106.2 n.a. 105.9 104.4 103.2

Japan Industrial Production (y-y%) -4.6% n.a. -4.6% -3.4% 0.1%

China Industrial Production (y-y%) 9.7% n.a. 8.9% 9.3% 9.2%

China M1 (y-y%) 9.7% n.a. 9.1% 11.9% 4.6%

* ECRI Weekly Lead Indicator reported with one week lag.

Risk/Volatility Level 1 week 1 Mth 3 Mth 12 Mth

CDS Spreads (bps)**:

US 22 22 23 30 40

Japan 66 63 62 70 79

Germany 29 26 28 30 61

UK 36 36 38 43 52

Portugal 464 436 452 293 682

Ireland 142 143 150 140 429

Italy 235 232 264 232 434

Spain 228 225 264 211 485

VIX Index 14.4 14.4 12.7 14.1 16.0

IVStoxx Index 28.8 29.3 29.4 33.3 89.7

** Spread over 3-month Euribor rate. Data based on 22 August 2013 close.

Source: Bloomberg. All data based on UK data for 23 August 2013, unless otherwise stated.

Notes: For Interest Rates - Green = Decline, Red = Rise. For Inflation - Green = Decline,

Red= Rise. For Growth Indicators - Green = Monthly Rise, Red = Monthly Decline. For

Foreign Exchange - " - %" = depreciation, "+ %" = appreciation. Green=Appreciation,

Red=Depreciation but reversed for USD/CNY to show green when CNY is appreciating vs

USD and green when US TWI is depreciating.

*** Greek CDS have not been priced since March 21, 2012.

The Week That Was

Date Time Event Survey Actual Prior

08/19/2013 00:50 JN Trade Balance Jul -¥773.5B -¥1024.0B -¥180.8B

08/20/2013 05:30 JN All Industry Activity Index MoM Jun -0.7% -0.6% 1.1%

08/21/2013 15:00 US Existing Home Sales MoM Jul 1.1% 6.5% -1.2%

08/22/2013 02:45 CH HSBC/Markit Flash Mfg PMI Aug 48.2 50.1 47.7

08/22/2013 08:30 GE PMI Manufacturing Aug A 51.1 52.0 50.7

08/22/2013 09:00 EC PMI Manufacturing Aug A 50.7 51.3 50.3

08/22/2013 13:30 US Initial Jobless Claims Aug-17 330K 336K 320K

08/22/2013 13:58 US Markit US PMI Preliminary Aug 54.2 53.9 --

08/22/2013 14:00 US House Price Index MoM Jun 0.6% 0.7% 0.7%

08/23/2013 07:00 GE GDP SA QoQ 2Q F 0.7% 0.7% 0.7%

08/23/2013 07:00 GE Exports QoQ 2Q 2.0% 2.2% -1.8%

08/23/2013 09:30 UK GDP QoQ 2Q P 0.6% 0.7% 0.6%

08/23/2013 15:00 EC Consumer Confidence Aug A -16.5 -15.6 -17.4

08/23/2013 15:00 US New Home Sales MoM Jul -1.4% -13.4% 8.3%

The Current Week

Date Time Event Survey Actual Prior

08/26/2013 13:30 US Durable Goods Orders Jul -4.0% -- 4.2%

08/27/2013 09:00 GE IFO Current Assessment Aug 111.0 -- 110.1

08/27/2013 14:00 US S&P/CS Composite-20 YoY Jun 12.2% -- 12.2%

08/27/2013 15:00 US Consumer Confidence Index Aug 79.5 -- 80.3

28-31 AUG CH Leading Index Jul -- -- 99.6

08/29/2013 00:50 JN Retail Trade YoY Jul -0.1% -- 1.6%

08/29/2013 13:30 US Initial Jobless Claims Aug-24 330K -- 336K

08/29/2013 13:30 US GDP Annualized QoQ 2Q S 2.2% -- 1.7%

08/29/2013 13:30 US Core PCE QoQ 2Q S 0.8% -- 0.8%

08/30/2013 00:30 JN Natl CPI YoY Jul 0.7% -- 0.2%

08/30/2013 07:00 GE Retail Sales YoY Jul 1.8% -- -2.8%

08/30/2013 10:00 EC Unemployment Rate Jul 12.1% -- 12.1%

08/30/2013 10:00 EC CPI Estimate YoY Aug 1.4% -- 1.6%

08/30/2013 13:00 IN GDP YoY 2Q 4.6% -- 4.8%

Global Markets Dashboard and Event Calendar

-5

0

5

10

15

20

0

400

800

1200

1600

2000

Jan-90 Jan-92 Jan-94 Jan-96 Jan-98 Jan-00 Jan-02 Jan-04 Jan-06 Jan-08 Jan-10 Jan-12

Front Gold Future (lhs)

Third Gold Future less First (rhs)

9/11/2001

Source: Bloomberg, ETF Securities

-

20,000

40,000

60,000

80,000

100,000

120,000

140,000

Jul-

11

Au

g-1

1

Sep

-11

Oct

-11

No

v-1

1

De

c-1

1

Jan

-12

Feb

-12

Mar

-12

Ap

r-1

2

May

-12

Jun

-12

Jul-

12

Au

g-1

2

Sep

-12

Oct

-12

No

v-1

2

De

c-1

2

Jan

-13

Feb

-13

Mar

-13

Ap

r-1

3

May

-13

Jun

-13

Kgs

China Net Gold Imports From Hong Kong (Monthly Data July 2011 to June 2013)

Source: Hong Kong Census and Statistics Department, ETF Securities

Source: ETF Securities, Bloomberg Green = Above Expectations, Red = Below Expectations. Reverse for inflation, unemployment and central bank interest rate changes to reflect that rises are generally market negative

26 August 2013


Global ETP Holdings

0

100

200

300

400

500

600

700

Apr 07 Apr 08 Apr 09 Apr 10 Apr 11 Apr 12 Apr 13

Silver Global ETP Holdings (mn oz)

Daily Data, From 25 Apr 07 to 23 Aug 2013

Sources: ETF Securities, Bloomberg

0

10

20

30

40

50

60

70

80

90


Gold Global ETP Holdings (million ounces)



0

500

1,000

1,500

2,000

2,500


Palladium Global ETP Holdings ('000 oz)



0

500

1,000

1,500

2,000

2,500


Platinum Global ETP Holdings ('000 oz)



Futures Curves (in USD/oz.)

26 August 2013


Futures Net Positioning and Trading Volumes (‘000 Contracts)

0

50

100

150

200

250

300

0

50

100

150

200

250

300

350

400

450

500

Aug 12 Oct 12 Dec 12 Feb 13 Apr 13 Jun 13 Aug 13

Trading Volume (LHS)

Net Non-Commercial Positions

COMEX Gold

Daily Data, From Aug 23, 2012 to Aug 23, 2013


0

10

20

30

40

50

60

0

50

100

150

200

250




COMEX Silver



13

18

23

28

33

38

43

48

53

58

0

5

10

15

20

25

30

35

40

45




NYMEX Platinum



2

7

12

17

22

27

32

0

5

10

15

20

25

30




NYMEX Palladium


Sources: ETF Securities, Bloomberg *Net Non-Commercial Positions updated to previous Tuesday.

Price Momentum

1,100

1,200

1,300

1,400

1,500

1,600

1,700

1,800

1,900


Gold Spot (in US$/oz)

Gold Spot (50 dma)

Gold Spot (200 dma)

Gold Spot Prices and Moving Averages



18

20

22

24

26

28

30

32

34

36


Silver Spot (in US$/oz)

Silver Spot (50 dma)

Silver Spot (200 dma)

Silver Spot Prices and Moving Averages



1,300

1,350

1,400

1,450

1,500

1,550

1,600

1,650

1,700

1,750

1,800


Platinum Spot (in US$/oz)

Platinum Spot (50 dma)

Platinum Spot (200 dma)

Platinum Spot Prices and Moving Averages



550

600

650

700

750

800


Palladium Spot (in US$/oz)

Palladium Spot (50 dma)

Palladium Spot (200 dma)

Palladium Spot Prices and Moving Averages



26 August 2013


Key Ratios

0

5

10

15

20

25

30

35

1998

2000

2002

2004

2006

2008

2010

2012

Gold/Oil Ratio

Daily Data, From Feb 06, 1998 to Aug 23, 2013


20

30

40

50

60

70

80

90

100

110

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

Gold/Silver Price Ratio

Daily Data, From Dec 31, 1990 to Aug 23, 2013


0

1

2

3

4

5

6

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

Platinum/Palladium Price Ratio

Daily Data, From Mar 16, 1992 to Aug 23, 2013


0.4

0.5

0.6

0.7

0.8

0.9

1.0

1.1

1.21992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

Gold/Platinum Price Ratio

Daily Data, From Mar 16, 1992 to Aug 23, 2013


26 August 2013


Important Information General

This communication has been provided by ETF Securities (UK) Limited (“ETFS UK”) which is authorised and regulated by the United Kingdom Financial Services Authority. When being made within Italy, this communication is for the exclusive use of the “qualified investors” and its circulation among the public is prohibited. This document is not, and under no circumstances is to be construed as, an advertisement or any other step in furtherance of a public offering of shares or securities in the United States or any province or territory thereof. Neither this document nor any copy hereof should be taken, transmitted or distributed (directly or indirectly) into the United States. This document may contain independent market commentary prepared by ETFS UK based on publicly available information. ETFS UK does not warrant or guarantee the accuracy or correctness of any information contained herein and any opinions related to product or market activity may change. Any third party data providers used to source the information in this communication make no warranties or representation of any kind relating to such data. The information contained in this communication is neither an offer for sale nor a solicitation of an offer to buy securities. This communication should not be used as the basis for any investment decision. ETFS UK is required by the United Kingdom Financial Services Authority ("FSA") to clarify that it is not acting for you in any way in relation to the investment or investment activity to which this communication relates. In particular, ETFS UK will not provide any investment services to you and or advise you on the merits of, or make any recommendation to you in relation to, the terms of any transaction. No representative of ETFS UK is authorised to behave in any way which would lead you to believe otherwise. ETFS UK is not, therefore, responsible for providing you with the protections afforded to its clients and you should seek your own independent legal, investment and tax or other advice as you see fit.

etfs aluminium (lse: alum) - etf securities pm-23-08-2013.pdf · 26 august 2013 for investment...

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