Brochures Precious_Metals.pdf

8/12/2019 Brochures Precious_Metals.pdf

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Precious Metals Markets & Products

A Passion to Perform.


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db Physical ETC an Overview

db Physical Exchange Traded Commodities are transparent

securities that trade on regulated exchanges. ETC enable

investors to gain physical exposure to commodities without

trading the metal. db Physical ETC are 100 % backed by the

respective metal itself and are quoted continuously during

exchange trading hours and can be bought or sold via any

bank or broker on the relevant stock exchange.

What db ETC are in addition:

Simply buy the commodity: db Physical ETC are linked 1:1

to the commodity spot price and can be seen as a physical

replicating Exchange Traded Commodity (ETC).

Physical replication: Each db Physical ETC are backed bythe replicated metal itself, which provides several benefits.

Physically Backed: db Physical Precious Metal ETC are

fully backed by the underlying metal which is owned by the

issuer. Only metal satisfying LBMA (London Bullion

Market Association) or LPPM (London Platinum and

Palladium Market) requirements is accepted.

Separated Assets: Physical Precious Metal allocated to any

particular db ETC series (i.e. ISIN) is not available to satisfy

the claims of holders of a different ETC series or other

creditors.

Trustee: In case of early redemption of the series, the Trus-

tee oversees in conjunction with the Metal Agent the liqui-

dation of the metal and the compensation of security holders.

Bankruptcy Remote Issuer: The issuer is DB ETC plc, incor-

porated in Jersey. The issuer is not an operating company;

its sole business is issuing ETC Securities.

Deutsche Bank AG: Deutsche Bank AG is behind all db Physical

ETC with its expertise in exchange traded products.

Liquidity of db ETC: Very liquid and traded intra-day on major

European stock exchanges with Deutsche Bank providing intra-

day market making.

NAV comparable Value: All db ETC can be traded at their fair

value (Value per ETC Security). This value is similar to the NetAsset Value of funds.

Minimum Tracking Error: The only divergence in returns of the

db Physical ETC and the spot price of the commodity derives

from the annual fee.

FX Hedging: Minimal exchange rate risk. Currency risk for

the euro denominated is hedged at index level by Deutsche Bank.

db Physical ETC are possible on all efficiently storable

commodities like gold, silver, platinum, palladium.


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3

4 Precious Metals

6 Gold

10 Silver

14 Platinum

18 Palladium

20 The Markets

21 Market History

22 Market Basics

26 The Products

26 Economic Description

27 Products with FX Hedging

28 Checklist for physical ETCs

30 Physical Exchange Traded Commodities

30 db Physical Gold ETC

30 db Physical Gold Euro Hedged ETC

31 db Physical Silver ETC

31 db Physical Silver Euro Hedged ETC

32 db Physical Platinum ETC

32 db Physical Platinum Euro Hedged ETC

33 db Physical Palladium ETC

33 db Physical Palladium Euro Hedged ETC

34 Please note

34 Advantages

34 Key Risks

Tableof Contents


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Precious metals production globally ranges from just over

20,000 tonnes of silver to a mere 4 tonnes of iridium per annum,

which is one of the rarest metals on the planet.

One of the major distinguishing features of the precious metalstrade, and specifically the gold market, compared to other com-

modities is that annual mine production of gold is less than

10 % of total stock in circulation. This tends to mean that the

gold forward curve is normally in contango and that volatility

levels tend to be lower than those of other commodity markets

where reserves are significantly lower compared to annual

demand and supply.

Gold held by central banks globally amounted to just over

30,000 tonnes as of the end of 2009. The lions share of these

gold holdings is held by the United States, Germany, France

and Italy. These countries gold holdings are equivalent to

around two-thirds of total reserves, compared to a world av-

erage of just over 10 %. By contrast, gold to total reserve ratios

are significantly lower in Asia and the Middle East and in some

circumstances below 3 % of total reserves. The performance

of the gold price has been closely linked to the level of the US

dollar and of real interest rates in the United States.

5

PreciousMetals


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Atomic

Number:

79

6


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7

of this system at the end of 1971 heralded not only freely floa-

ting exchange rates, but also freely floating gold prices.

Major producers

Since 1905, South Africa had been the worlds largest producer

of gold. However, in 2007 China surpassed South African pro-

duction by 16 tonnes. During this decade, South African pro-

duction suffered from declining ore grades, maturing mines,

power disruptions and labour unrest. Today China, South Africa,

Australia and the US account for approximately 40 % of the

worlds annual gold mine production.

Major holders

Global central banks remain a powerful community in terms of

the world gold market. Their combined holdings amounted to

30,436 tonnes as of April 2010. The largest holder of reserves

is the United States with 8,134 tonnes, equivalent to 72.8 % of

the US`s total reserves. The average gold to total reserve ratio

across all central banks is 10.8 %. However, in Europe ratios

are significantly higher with Portugal holding the highest gold

Golds chemical symbol is Au derived from the Latin word

aurum and its atomic number is 79. It was first mined in Egypt

more than 4,000 years ago. It was used in the worlds first

coinage around 640BC in Lydia, in what is modern-day Turkey.

Gold is a dense, lustrous, yellow precious metal that has been

used for millennia as a store of value, as a unit of exchange and

in jewellery. It is the most malleable and ductile metal known

to man such that a single gram of gold can be beaten into a

sheet of one square metre or a wire more than one mile long.

Gold is a good conductor of heat and electricity, and it is unaf-

fected by air, heat, moisture and most solvents. It is occasionally

found in nuggets, but occurs more commonly as minute grains

between mineral grain boundaries. Historically, gold was ob-

tained by panning streambeds, but modern extraction tech-

niques can economically recover gold from ore grades as low

as 0.5 parts per million. Gold was used as a benchmark for the

world monetary system between 1944 and 1971, when the

Bretton Woods agreement fixed the worlds paper currencies

to the US dollar, which, in turn, was tied to gold. The collapse

Gold History & properties


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Gold price

Source: Bloomberg, as of June 2010

9

1950 1960 1970 1980 20001990 2010

Dollar

700

800

600

300

100

200

0

400

500

Gold price inflation adjusted


Source: Deutsche Bank Research

Gold demand

1920 1930 19501940 1960 1970 1980 1990 2000 2010

1.200

1.000

600

200

400

0

800

Ounce in dollar


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Atomic

Number:

47

10


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Silver has the chemical symbol Ag derived from the Latin

argentum and its atomic number is 47. First mined on a large

scale around five thousand years ago in an area that is mo-

dern-day Turkey, its use was widespread due to ease of

access since silver deposits form on or near the earths

surface. Silver is often found in close proximity to other ores,

such as lead, copper and zinc.

Silver has the highest electrical conductivity of all metals, but

its cost, being 64 times more expensive than copper, has pre-

vented it from being used more widely for electrical purposes.

It is also ductile, malleable, a superior conductor of heat and

a good reflector of light. Sterling silver is a commonly used

alloy of silver containing 92.5 % silver and 7.5 % copper.

Major producers & consumers

Approximately three-quarters of silver is mined from gold,

copper, lead and zinc mines as a by-product of these metals.

Peru is the worlds largest producer of silver with 4000 tonnes

in 2009, followed by Mexico, China, Australia and Chile. Due

to silvers importance in industrial applications, the US and

Japan are the largest consumers representing almost 40 %

of world fabrication demand. India and China are the worlds

third and fourth largest consumers of the metal.

Major uses

Throughout history, silver has been used in the manufacture

of ornaments, utensils, jewellery and coins. Today demand

for silver is dominated by three main categories: jewellery

and silverware, industrial applications and photography.

Jewellery and silverware is not only the largest category of

demand, but also the one most sensitive to price.

Unlike gold, silver has significantly more industrial applica-

tions due to the fact that silver is 50 times cheaper than gold.

Due to its conductivity, silver is used extensively in the elec-

Silver History & properties

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tronics sector as well as in photography. However, photogra-

phic fabrication demand for silver has fallen steadily over

recent years due to the increasing popularity of digital came-

ras. Other industrial applications of silver include use in cata-

lysts, water purification, electrical applications, brazing and

soldering, mirror and other coatings and electroplating.

Exchange traded

Silver is traded on the COMEX division of the New York Mer-

cantile Exchange (NYMEX), the Chicago Board of Trade

(CBOT), and the Tokyo Commodities Exchange (TOCOM). The

COMEX silver futures contract specifies delivery of 5,000 troy

ounces, and is quoted in US cents per troy ounce. The Bloom-

berg ticker for the spot silver price is SLVRLN

and is quoted in US cents per troy ounce.

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1

1960 1970 1980 20001990 2010

Dollar

35

40

30

15

5

10

0

20

25

Silver price


1970 1980 1990 2000 2010

100

80

40

20

0

60

Gold silver ratio

Gold silver ratio


Industry

Photography

Jewellery

Silver goodsCoins & Bars

Source: Silver Institut

Silver demand

I

ll

il

i 53 %

8 %

19 %

7 %

13 %


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Atomic

Number:

78

14


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metal in 1751. Until recently, the definition of a metre was

based on the distance between two marks on a platinum/

iridium bar housed at the Bureau International des Poids et

Mesures in Svres, France. Even today, the definition of a

kilogram is based on a platinum/iridium cylinder also housed

in the Bureau.

Major producers

Around 80 % of the worlds reserves and production of platinum

occur in Southern Africa primarily in South Africas Bushveld

Igneous Complex, just north of Pretoria. Platinum also occurs

in Zimbabwes Great Dyke, which bisects the country from

north to south. Of the remaining global deposits, Russias are

the most significant and these are predominantly a by-product

of Norilsks nickel deposits. Other major producers are Canada

and the US although production in these countries is mostly

a by-product of nickel and palladium production. In terms of

yield, 7 to 12 tonnes of ore are required to produce just one

troy ounce, or approximately 31 grams, of platinum.

Platinum has the chemical symbol Pt and its atomic number

is 78. The English word platinum derives from the Spanish

word platina meaning little silver as the Spaniards named the

metal when they first encountered it in Colombia. Platinum

is one of the noble metals, which means, very few chemicals

react with it or corrode it. It is 30 times rarer than gold, re-

presenting around 3 parts per billion of the Earths crust. In

addition, it is twice as heavy as gold. Like gold, platinum is

pliable such that one gram can be rolled into a fine wire over

one mile long.

The metal has excellent catalytic properties and its resistance

to tarnishing makes it well suited for making jewellery. It is

extremely corrosion resistant and has a high melting point. It

is used in fuel cells as a catalyst to convert hydrogen and

oxygen to electricity. Platinum has been found in objects from

ancient Egyptian civilisation as early as 700BC. However, it is

claimed to have been discovered by astronomer Antonio de

Ulloa in the mid -1700s and was formally recognised as a new

Platinum History & properties

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Major uses

Autocatalytic applications are the largest single use of platinum,

accounting for over 50 % of total platinum usage. Its use is

predominantly to clean tailpipe emissions in light-duty diesel

automotives. Jewellery is the second most important source

of demand, accounting for around 20 % of total demand with

Japan and China representing the majority of the global plati-

num jewellery market. Platinum is also becoming increasingly

important as an industrial metal in the chemical, electrical and

glass manufacturing industries. However, it is platinum as well

as rutheniums role as a catalyst in hydrogen fuel cell techno-

logy which could revolutionise demand for these metals parti-

cularly in an environment of high oil prices. Fuel cells convert

the energy of a chemical reaction directly into electricity, with

heat as a by-product. Unlike in the use of fossil fuels, the

exhaust product of a fuel cell is simply water.

Exchange traded & price conventions

The main exchange for trading platinum futures is the Tokyo

Commodities Exchange but they are also listed on the New

York Mercanti le Exchange. The Bloomberg ticker for the

platinum spot price is PLTMLNPM .

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1

In 2007, Norilsk Nickel represented around 43 % of world

supply. However, 80 % of the worlds reserves of palladium,

occur in Southern Africa primarily in South Africas Bushveld

Igneous Complex but also in Zimbabwes Great Dyke.

Amongst the remaining global deposits, the United States

and Canada have a small percentage of global reserves, with

few reserves of any consequence elsewhere in the world.

Major uses

Like platinum, autocatalytic applications represent the largest

category of demand, accounting for 58 % of total palladium

usage. In 2007, electronics and jewellery accounted for nearly

15 % and 10 % respectively of palladium demand. Palladium

is also used in electronic and dental industries as well as in

anti-cancer medication as it inhibits cell division.

Exchange traded & price conventions

Until 2000, when onerous restrictions were imposed on various

contracts, the Tokyo Commodities Exchange was the main

exchange for trading palladium futures. During the last decade

COMEX, which forms part of NYMEX, has become the largest

liquid exchange for trading palladium. The Bloomberg ticker

for the palladium spot price is PLDMLNPM .

l

i

l i i

ll48%

11%

6%

19%

16%

Palladium demand

Source: Johanson Matthey

Palladium price

1994 1996 19971995 1998 1999 2000 2001 2002 2003 2004 2005 2008 20092006 2007 2010

Dollar

1.000

800

400

200

0

600


Car Catalyser

Chemistry

Electricity

Investments (ETC)

Jewellery


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20

TheMarkets


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Allocated Accounts

(Form of db ETC storage in respect of allocated bullion)

These accounts are opened when a customer requires metal

to be physically segregated and needs a detailed list of

weights and assays. The client has full t itle to the metal in the

account, which is held by the dealer as custodian for the

client.

Unallocated Accounts

These represent the most straightforward and hence most

popular way of trading, settling and holding gold, silver,

platinum and palladium and are the cornerstone of the loco

(meaning the place at which gold is physically held and to

which a particular price applies) London mechanism for

bullion and the loco London / Zurich * mechanism for platinum

and palladium. The units of these accounts are one fine troy

ounce of gold and one troy ounce of silver, platinum or palla-

dium based upon a 995 fine LGD gold bar, a 999 fine LGD

silver bar or a 999.5 GD platinum or palladium plate or ingot.

MarketBasics

* Please note: The products are based on Loco London only.


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Trading Unit

In relation to gold the trading unit is one fine troy ounce and for

silver, platinum and palladium it is one troy ounce. The significance

of this differentiation is that in the case of gold, the unit represents

pure gold irrespective of the purity of a particular bar, whereas

for silver, platinum and palladium it represents one ounce of

material, of which a minimum of 999 parts in every 1,000 is silver

and 999.5 parts in every 1,000 is platinum or palladium.

Fineness is a measure of the proportion of gold or silver in a

bullion bar or platinum or palladium in a plate or ingot and is

expressed in terms of the fine metal content in parts per 1,000.

Fineness therefore defines the purity of a gold or silver bar or

platinum or palladium plate or ingot.

Assaying is the process by which fineness is determined. The

purity of silver, platinum and palladium articles is often quoted

in the form of fineness for instance, sterling silver is 925

fine. On the other hand, the fineness of gold jewellery is usu-

ally expressed in carats (parts of fine gold per 24). Eighteen-

carat jewellery is therefore 750 fine in bullion market terms.

Troy Ounce

The traditional unit of weight used for precious metals. The term

derives from the French town of Troyes, where this unit was

first used in the Middle Ages. One troy ounce is equal to

1.0971428 ounces. In the bullion market, all references to

ounces mean troy ounces.

Unit for Delivery of Loco London Gold

A London Good Delivery gold bar must have a minimum fine-

ness of 995.0 and a gold content of between 350 and 430 fine

ounces with the bar weight expressed in multiples of 0.025 of

an ounce (which is the smallest weight used in the market).

Bars are generally close to 400 ounces or 12.5 kilograms. Both

gold and silver Good Delivery bars must conform to the

specifications for Good Delivery set by the LBMA.


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Unit for Delivery of Loco London Silver

A London Good Delivery silver bar must have a minimum fine-

ness of 999 and a weight range between 750 and 1,100 ounces,

although it is recommended that ideally bars should be pro-

duced within the range of 900 to 1,050 ounces. Bars generally

weigh around 1,000 ounces.

Unit for Delivery of Loco London Platinum and

Palladium

A Good Delivery platinum or palladium plate or ingot must have

a minimum fineness of 999.5 and a weight of between 1 kilo-

gram (32.151 troy ounces) and 6 kilograms (192.904 troy

ounces). The weight of the plate or ingot if in grams must be

expressed to one decimal place and if in troy ounces to three

decimal places. Both platinum and palladium Good Delivery

plates or ingots must conform to the specifications for Good

Delivery set by the LPPM.

The Gold Fixing

There are five members of the Gold Fixing all of whom are

Market Making Members of the LBMA. The Fixing is conducted

by telephone twice on each London business day at 10.30 a.m.

and 3.00 p.m. Clients place orders with the dealing rooms of

Fixing Members, who net all orders before communicating the

net interest to their representative at the Fixing.

The gold price is then adjusted up and down until sell and buy

orders are matched, at which point the price is declared

fixed and all orders are executed on the basis of that price.

Transparency at the Fixing is served by the fact that customers

may be kept advised of price changes, together with the level

of interest, while the Fixing is in progress and may cancel,

increase or decrease their interest dependent upon this infor-

mation. The chairmanship of the Fixing rotates annually among

the member firms.


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2

The Silver Fixing

Three Market - Making Members of the LBMA conduct the Silver

Fixing meeting under the chairmanship of The Bank of Nova

Scotia Scotia Mocatta by telephone at 12.00 noon each London

business day. The other two members of the Silver Fixing are Deut-

sche Bank AG London and HSBC Bank USA NA London Branch.

The process then follows a similar pattern to gold, arriving at a fixing

price when buying and selling orders are matched.

The Platinum and Palladium Fixings

The Platinum and Palladium Fixings are currently conducted by

four Full Members of the LPPM by telephone at 9.45 a.m. and 2.00

p.m. each London business day under the chairmanship of Stan-

dard Bank. The other LPPM Fixing members are Engelhard Metals,

Goldman Sachs International and HSBC Bank USA NA London

Branch. The process then follows a similar pattern to the gold, arri-

ving at a fixing price when buying and selling orders are matched.


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The Products

26262626

Economic

Descriptiondb ETC based on precious metals directly invest in the precious

metals; any securities issued by db ETC based on precious

metals therefore directly reflect the relevant underlying. The

amount outstanding of all db ETC on precious metals is mirrored

by the relevant metals deposited.

The securities issuer is DB ETC plc, an entity founded for the

sole purpose of issuing securities and investment in precious

metals. DB ETC plc does not carry out any other business and

any business risk is therefore effectively eliminated. All de-

posited precious metals are legally owned by the issuer. In ad-

dition, to reach a higher level of security, the stock is then

pledged to a trustee corporation. This happens solely for the

purpose of ensuring that no potential creditor has access to the

precious metal stock in the unlikely event of default of the

Functionality (graphical)

InvestorMarketMaker

DBETCPLC

Perfomance

Trustee

Corporation(Deutsche Treuhand)

AU, AG,PAL, PLAT(Allocated)

USD USD USD

Legal ownership


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22

Precious metals, like other major commodities, are quoted in

USD. A direct investment in these commodities hence ex-

poses investors whose main currency is not the US dollar to

the risk of foreign exchange fluctuations. Specifically, a

depreciation of the US dollar will result in a loss /reduced gain

for non-US dollar based investors (e.g. Euro investors).

db FX Hedged ETC enable investors to gain exposure to the returns

of precious metals while minimising any currency risk. The perfor-

mance of db FX Hedged ETC is approximately equal to the perfor-

mance of metal, but in the hedged currency (e.g. the Euro).

The advantage of the currency hedge lies in the fact that its

costs are easy to calculate: the short term interest rate in the

US dollar area minus the short term interest rate in the

Products with

FXHedging

1971 1975 1980 1985 1990 1995 2000 2005 2010

3.000

2.000

2.500

1.000

500

0

1.500

Index at 100

Gold price performance in USD


Gold from USD perspective

Gold from EURO perspective

hedged currency. Currency hedging is carried out on a

daily basis.


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28

swap or trade any precious metal that forms the Metal

Entitlement for the db ETC Securities.

Stored Bar Numbers

Bar lists are verifiable against the LBMA and LPPM Good

Delivery list.

Storage

Allocated metals are kept in fortified, high-security vaults

specifically designed for bullion storage.

Bankruptcy remote issuer

The Issuer is a bankruptcy remote vehicle whose sole purpose

is to issue ETC securities. The metal in respect of each Series

of ETC Securities is segregated from all other Series.

Silo Structure

Metal in respect of each Series of db ETC Securities is owned

by the Issuer and held in secured form solely for that Series.

As such this metal is segregated from any other assets held

by the Custodian for the benefit of other Series of db ETC

Securities issued by the Issuer (both physically and in its

records).

Traditional Investments

Physically-backed db ETC are 100 % physically backed with

LBMA or LPPM Good Delivery gold, silver, platinum or

palladium bars as may be the case held in secured accounts

owned by the issuer.

Bars have a set number of ounces and a prescribed fineness

(purity) of 99.5 % and must bear the stamp of an LBMA or

LPPM - approved smelter / assayer. They are the only bars

permitted for delivery in the London OTC market. Bullion held

loco London is the most liquid.

Metal Accounts

The accounts operated by the Custodian holding the relevant

precious metal for a Series of db ETC Secur ities is sufficient at

any point in time to cover the 100 % of the db ETC securities

that are oustanding.

All precious metal is secured

The Metal Entitlement for each DB ETC security represented

by precious metal and held by the Custodian on behalf of the

security holders cannot be exchanged for cash, certificates

representing the right to receive precious metal or anything

else. Neither the Issuer nor the Custodian is allowed to lease,

Checklistforphysical ETCs


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32

Source: Deutsche Bank

Product PlatinumName db Physical Platinum ETC

Objective The objective of the db Physical Platinum ETC is to

reect the performance of the price of platinum bullion,

less the ETC fees.

Underlying Allocated Platinum bars London Platinum & Palladium

Market

Replication Form Physical

Initial Entitlement 1 /10 Troy Ounce Platinum

Curreny UDS

ISIN GB00B57GJC05

Bloomberg XPLA LN

REUTERS XPLA.L

Product Fee 0,45%

Issuer DB ETC plc

Market Maker Deutsche Bank AG, London Branch

Underlying

Bloomberg PLTMLNPM

REUTERS XPT=

Bars London Good Delivery Platinum bars

Storage Allocated Form, London Platinum & Palladium Market

Custodian/ Sub-custodian Deutsche Bank / JP Morgan Chase Bank, London

Trustee Deutsche Trustee Company Limited

Trading

Listed Exchanges London Stock Exchange

Trading Hours 9:00 am 5:30 pm

Exchange Code XPAL

Settlement T+3

Cutoff Time 1:30 pm

Additional NAV Trading Cost 0,00 %


Product Platinum with FX hedgeName db Physical Platinum Euro Hedged ETC

Objective The objective of the db Physical Platinum ETC is to

reect the performance of the price of platinum bullion,

less the ETC fees.

Underlying Allocated Platinum bars London Platinum &Palladium


Initial Entitlement 1 /10 Troy Ounce Platinum

Curreny Euro

ISIN DE000A1EK0H1

Bloomberg XAD3 GY

REUTERS XAD3.DE

Product Fee 0,45 %

FX Hedge Fee 0,30 %

Issuer DB ETC plc


Underlying

Bloomberg PLTMLNPM

REUTERS XPT=

Bars London Good Delivery Platinum bars


Custodian/ Sub-custodian Deutsche Bank / JP Morgan Chase Bank, London


Trading

Listed Exchanges Xetra


Exchange Code XAD3

Settlement T+2

Cutoff Time 1:30 pm


Market


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3


Product PalladiumName db Physical Palladium ETC

Objective The objective of the db Physical Palladium ETC is to

reect the performance of the price of Palladium

bullion, less the ETC fees.

Underlying Allocated Palladium bars London Platinum & Palladium

Market


Initial Entitlement 1/10 Troy Ounce Palladium

Curreny USD

ISIN GB00B5VYVZ75

Bloomberg XPAL LN

REUTERS XPAL.L

Product Fee 0.45 %

Issuer DB ETC plc


Underlying

Bloomberg PLDMLNPM

REUTERS XPD=

Bars London Good Delivery Palladium bars


Custodian /Sub-custodian Deutsche Bank / JP Morgan Chase Bank, London


Trading

Listed Exchanges London Stock Exchange


Exchange Code XPAL

Settlement T+3

Cutoff Time 1:30 pm



Product Palladium with FX hedgeName db Physical Palladium Euro Hedged ETC

Objective The objective of the db Physical Palladium ETC is to

reect the performance of the price of Palladium

bullion, less the ETC fees.

Underlying Allocated Palladium bars London Platinum & Palladium


Initial Entitlement 1/10 Troy Ounce Palladium

Curreny Euro

ISIN DE000A1EK3B8

Bloomberg XAD4 GY

REUTERS XAD4.DE

Product Fee 0.45 %

FX Hedge Fee 0.30 %

Issuer DB ETC plc


Underlying

Bloomberg PLDMLNPM

REUTERS XPD=

Bars London Good Delivery Palladium bars

Storage Allocated Form, London Palladium & Palladium Market

Custodian / Sub-custodian Deutsche Bank /JP Morgan Chase Bank, London


Trading

Listed Exchanges Xetra


Exchange Code XAD4

Settlement T+2

Cutoff Time 1:30 pm


Market


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Key Risks

db ETC are non-principal protected investments, therefore

an investors capital will be at risk up to a total loss.

Prices of precious metals are generally more volatile than

prices of other asset classes.

Investments in db Physical ETC will not accrue any

interest and performance is subject to the deduction of the

product fee.

The value of an investment in db ETC securities may go down

as well as up and past performance is not a good indicator

of future performance.

Investing in ETC Securities will not make an investor the

owner of the relevant Metal.

Investment in db ETC is only suitable for financially sophisti-

cated investors who can understand the risk associated with

such investment.

Advantages

Convenience: An easy way to gain exposure to the spot

returns of the underlying precious metal.

Liquidity: Very liquid and traded intra-day on major European

stock exchanges with Deutsche Bank providing intra-day

market making.

Minimal tracking error: Returns of the ETCs are equal to

the spot returns of the underlying metal minus any feesapplicable.

Physical ownership: Backed by the corresponding physical

metal.

Transparent to value: Precious metal prices are published

daily in major newspapers, TV and other news sources.

Segregated: The physical metal is stored in secure vaults

and each ETC series has a security over specific metal

account held by the custodian.

db PM Euro Hedged ETC have a daily currency hedging

mechanism to minimise the EUR / USD exchange rate risk.

Please note

34


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Disclaimer

Important Information:

This document is intended for discussion purposes only and does not

create any legally binding obligations on the part of Deutsche Bank AG

and/or its affiliates (DB). Without limitation, this document does not

constitute an offer, an invitation to offer or a recommendation to enter

into any transaction. When making an investment decision, you should

rely solely on the final documentation relating to the transaction and not

the summary contained herein. DB is not acting as your financial adviser

or in any other fiduciary capacity with respect to this proposed transaction.

The transaction(s) or products(s) mentioned herein may not be appropri-

ate for all investors and before entering into any transaction you should

take steps to ensure that you fully understand the transaction and havemade an independent assessment of the appropriateness of the transaction

in the light of your own objectives and circumstances, including the pos-

sible risks and benefits of entering into such transaction. For general in-

formation regarding the nature and risks of the proposed transaction and

types of financial instruments please go to www.globalmarkets.db.com/

risk disclosures. You should also consider seeking advice from your own

advisers in making this assessment. If you decide to enter into a transac-

tion with DB, you do so in reliance on your own judgment. The informa-

tion contained in this document is based on material we believe to be

reliable; however, we do not represent that it is accurate, current, com-

plete, or error-free. Assumptions, estimates and opinions contained in this

document constitute our judgment as of the date of the document and are

subject to change without notice. Any projections are based on a number

of assumptions as to market conditions and there can be no guarantee

that any projected results will be achieved. Past performance is not a

guarantee of future results. This material was prepared by a Sales or Tra-

ding function within DB, and was not produced, reviewed or edited by the

Research Department. Any opinions expressed herein may differ from the

opinions expressed by other DB departments including the Research De-

partment. Sales and Trading functions are subject to additional potential

conflicts of interest which the Research Department does not face. DB

may engage in transactions in a manner inconsistent with the views dis-

cussed herein. DB trades or may trade as principal in the instruments (or

related derivatives), and may have proprietary positions in the instruments

(or related derivatives) discussed herein. DB may make a market in the

instruments (or related derivatives) discussed herein. Sales and Trading

personnel are compensated in part based on the volume of transactions

effected by them. The distribution of this document and availability of

these products and services in certain jurisdictions may be restricted by

law. You may not distribute this document, in whole or in part, without

our express written permission. DB SPECIFICALLY DISCLAIMS ALL LIA-

BILITY FOR ANY DIRECT, INDIRECT, CONSEQUENTIAL OR OTHER LOS-

SES OR DAMAGES INCLUDING LOSS OF PROFITS INCURRED BY YOU

OR ANY THIRD PARTY THAT MAY ARISE FROM ANY RELIANCE ON THIS

DOCUMENT OR FOR THE RELIABILITY, ACCURACY, COMPLETENESSOR TIMELINESS THEREOF. DB is authorised under German Banking Law

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ness.

Picture source: Cover: Corbis, p. 4-5 Corbis, p. 6-7: Shutterstock, Heraeus, Mauritius,

Getty Images, p. 8-9: Corbis, Mauritius, Heraeus, p. 10-11: Corbis,Fotolia, Shutterstock,

p. 12-13:Corbis, Shutterstock, Heraeus, p. 14-15: Corbis, Shutterstock, p. 16-17:Getty

Images,Shutterstock, p. 18-19:Corbis, Picture Alliance, p. 20-21:Corbis, Getty Images,

p. 22-23:Corbis, Getty Images, p. 24-25:Corbis,Getty Images, p. 26-27:Corbis,Shut-

terstock, p. 28-29:Corbis, Getty Images, Shutterstock,p. 30-31:Fotolia, Heraeus,

p. 32-33: Corbis, Getty, Heraeus, Images, p. 34: Shutterstock


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Convenience: An easy way to gain exposure on spot returns of

the underlying precious metal.

Liquidity of db ETC: Very liquid and traded intraday on major

European stock exchanges with Deutsche Bank providing

intraday market making.

Minimal tracking error: Returns of the ETCs are equal to the

spot returns of the underlying metal minus any applicable fees.

Physical ownership: Backed by the corresponding physical

metal.

Transparent to value: Precious metal prices are published

daily in major newspapers, TV and other news sources.

Segregated: The physical metal is stored in secure vaults and

each ETC series has a security over specific metal account

held by the custodian.

Further information

Internet: www.etc.db.com

Product information

Deutsche Bank AG

db ETC Team

Winchester House

1 Great Winchester Street

London

EC2N 2DB

Hotline: +44 (20) 754 577 00

db Exchange Traded Commodities (db ETC)

Brochures Precious_Metals.pdf

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