Precious MetalsMonthly report
Standard Bank PlcCannon Bridge House25 Dowgate Hill, London EC4R 2SB
3rd March 2008
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Gold Gold continued to benefit during February from the nervousness in the financial
sector and latterly weak economic figures from the United States (and to a lesser extent
Europe and Japan) that extended concerns over possible further tightening of credit
conditions. The inflation figures in the United States, particularly at the intermediate level
(such as semi-finished goods) have prompted talk of stagflation and this has encouraged
continued investment in the gold sector (against a persistently bearish outlook for the
dollar prompted in part by record high oil and other commodity prices).
With retail physical demand remaining dented by high and volatile prices, the buy-
side of the market has remained dominated by funds and speculators. There have
been signs of some profit taking from private holders, in the Far East especially.
The market was unfazed by news that the United States Treasury and EU Finance
Ministers agreed in principle with the proposal for sales of 400 tonnes of gold from
the IMF, and was more concerned by Dr. Bernanke’s testimony on the delivery of
the semi-annual Monetary Policy Report to the Congress, which focus more on the
downside risks to the economy than the spectre of increased inflation.
At the start of March gold is trading above $970 and this is prompting
suggestions of an imminent attack on $1,000/ounce. The majority of indicators
suggest that much of the “bad news” is already in the price and it is arguable that
while gold has the potential for further gains, much of the upward course has been
run, especially with the physical market firmly on the back foot.
•
•
•
•
Gold 1
Silver 6
Platinum Group Metals 9
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Precious Metals
0
50
100
150
200
250
300
Jan-07 Apr-07 Jul-07 Oct-07 Jan-08
Contracts000s
550
650
750
850
950
US$/oz
Non-Commercial Non-ReportableSettlement Price
Spot gold in dollar terms against $; euro rate
Gold traded between a low pm fix of $887.50 (on the 5th of
February) and a high of $971.50 at the end of the month,
a range of just over 9%, while gaining a net 6% over the
month. In euro terms the range was almost identical, but
the net gain was just 4%. Market sentiment is for further
gains in dollar terms and with doubts over the euro there
may well be increases to come in euro terms also.
Non-commercial and Non-reportable Net Positions
The net long speculative position on COMEX fluctuated
narrowly in February, suggesting that the position may have
reached critical mass, although the volume figures (see below
left) suggest some migration into the Over the Counter
market. At end-January, the position was 762 tonnes, rising
to 786 tonnes on 19th February and easing fractionally to
785 tonnes at month-end.
COMEX futures volume and open interest ETF Holdings
Volumes traded on COMEX tailed away in the first half of
the month and prices traded effectively sideways, before
starting to increase again thereafter as market interest was
rejuvenated and the price resumed its upward run. Daily
volumes averaged 409 tonnes, compared with 242 tonnes
per day in February 2007. Open interest dwindled in the
first half in line with volume and price, before reviving to
reach 1,540 tonnes in late February.
Holdings in the major Exchange Traded Funds increased by 17
tonnes over the month, with the major changes taking place
in the final week in the wake of Dr. Bernanke’s Congressional
testimony. The major changes were in the New York
StreetTRACKS Fund (eight tonnes), with small increases in the
majority of the others, taking the total to 880 tonnes of gold.
Dollar:Euro & Gold Price
550
650
750
850
950
1050
Jan-07 Apr-07 Jul-07 Oct-07 Jan-08
US$/oz
1.20
1.28
1.36
1.44
1.52
US$/€
PM Fix $ US$/€
0
50
100
150
200
250
300
350
Jan-07 Apr-07 Jul-07 Oct-07 Jan-08
Contracts000s
200
300
400
500
600
700
Contracts000s
Volume Open Interest (rhs)
0
200
400
600
800
1000
Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08
Tonnes
300
400
500
600
700
800
900
1,000US$/oz
GBS LSE streetTRACKS iShares
Other Gold PM Fix
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Precious Metals
Gold and the S&P 500
The equity markets remained nervous about economic
conditions, with the Dow Jones Industrial Average falling by
3.1% and the S+P 500 shedding 3.5% over February, with
early falls followed by stability and then renewed weakness
at month-end. Gold was a major beneficiary of the latter
weakness and is expected to continue to show strength as
the markets debate the deteriorating outlook for economic
activity in both the US and Europe.
Spot gold vs gold equities
Lease rates continued to increase for most of February,
following their upward turn in January, before slipping
lower in the final week of the month. This looks as if it
reflects a degree of short covering in the market, but the
curve remains flat, with rates below 0.5% in the twelve-
month tenor.
While the average price in dollar terms registered a 39% gain
over February 2007, the average in both euro and terms was
23% higher, and in Swiss franc terms, 22%. With strong
commodities buoying the Australian and Canadian dollars
the increase was 19%, but the weakness of the Rand meant
that local South African prices gained 48% over February
2007 levels.
Gold mining equities outperformed the yellow metal over
the month as a whole, with a gain of 8% against gold’s rise
of 6%. This reflects a stronger second half performance as
both gold and mining stocks turned up. The equities gained
12% in the second half against gold’s 6%, suggesting that
the markets trust the recent rise in the gold price, and are
looking for further gains, but also that any increase in the
near-to-medium term is likely to be gradual.
Leasing Rates (%)
Feb % Ch.
US$/oz 2007 Jan-Feb 08 Feb 08 mom yoy
Average 695.91 905.59 923.29 4% 39%
High 841.75 971.50 971.50 N/a N/a
Low 608.30 840.75 887.50 N/a N/a
3-mth 12-mth
Average
2007 0.21% 0.26%
Jan-Feb 08 0.25% 0.39%
Feb 08 0.29% 0.45%
High
2007 0.19% 0.20%
Jan-Feb 08 0.40% 0.58%
Feb-08 0.40% 0.45%
Low
2007 0.04% 0.03%
Jan-Feb 08 0.15% 0.22%
Feb-08 0.17% 0.36%
Prices (based on a.m. and p.m. fix)
550
650
750
850
950
1050
Jan-07 Apr-07 Jul-07 Oct-07 Jan-08
GoldPrice
1200
1300
1400
1500
1600
S&P500
Au $ pm fix S&P 500
550
650
750
850
950
1050
Jan-07 Apr-07 Jul-07 Oct-07 Jan-08
GoldPrice
100
120
140
160
180
200
220
XAUIndex
Au $ pm fix XAU
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Precious Metals
Gold vs the Long Bond Yield Gold and the VIX Index
Gold and the long bond yield resumed their normal
relationship (i.e. running in similar directions) in late January
and this was sustained through to late February, with gold
benefiting from uncertainties in the Treasury markets.
The bond market then reasserted itself as a “safe haven”
in late February as the markets again focused on falling
interest rates, so that in late February gold was rallying and
yields were easing. With renewed concerns over economic
slowdown, this fresh inverse relationship may be sustained
for the near term although much of the moves may now be
complete.
The VIX Index measures market uncertainty through
equity option volatility and does not always have a strong
relationship with gold. The correlation between the two
(simple polynomial regression) has been 42% over the past
three years. In February the correlation was 49%. The VIX
Index eased over much of February but in this parameter,
too, the markets’ increasing concerns were reflected in the
final week, with VIX rising from 21.0 to 26.5. Further gains
are expected in both VIX and gold although there is a feeling
that financial stocks may be bottoming out and this would
also point to a decline in the rate of increase in both gold
and VIX.
The strength of the oil price remains an important parameter
in the financial markets as it partly reflects geopolitical
tension (exacerbated by disruption in shipments between
Venezuela and the US) and of course feeds into inflationary
expectations. OPEC talks in the first week of March will be
instructive as the price has been strong in anticipation of
production cuts. This will therefore be a key indicator to
watch for short term signals and may well cascade into gold,
if only at a muted level.
Key IndicatorsKey Indicators
Feb % Change
(end-period) 2007 Feb-08 mom yoy
S&P 500 1,468 1,331 -3% -5%
CRB Index 427 483 10% 29%
XAU Index 173 197 6% 41%
US 30-yr Bond Yield 4.50 4.41 N/a N/a
Gold Price ($/oz) 836.50 971.50 5% 46%
Key Indicators
550
650
750
850
950
1050
Jan-07 Apr-07 Jul-07 Oct-07 Jan-08
GoldPrice
3.5
4.0
4.5
5.0
5.5
6.0
BondYield
Au $ pm fix 30-yr Bond yield
550
650
750
850
950
1050
Jan-07 Apr-07 Jul-07 Oct-07 Jan-08
GoldPrice
3.5
8.5
13.5
18.5
23.5
28.5
33.5
VIXIndex
PM Fix $ VIX
Gold
February 27th 2008
Darran Grabham* +27-11-378-7228 [email protected]
Gold Gold continues to trade to new highs, but the bull trend remains restricted to trendline resistance of a potential ascending wedge pattern — this is a trend-ending formation. We are not pre-empting a bearish breakout, and a positive view is maintained while the support line of the wedge protects the downside. However, caution is advised, with the outlook only becoming signifi-cantly bullish again on a move beyond the upper trendline.
The $910 level represents support of the ascending wedge pattern, with a break lower warning that the market is in the process of establishing a near-term top. This development would be expected to yield a move into the more important $870 to $850 sup-port zone, and an aggressively bearish view will only be expressed below $850 — gold will then be vulnerable to a move below $800. The topside is protected by the $960 to $970 area. Once this resistance zone is breached — a move beyond $980 should provide the necessary confirmation — the way will be clear for a move to $1,080. An interim top may develop around $1,040.
Source: Reuters
Source: Reuters
USD/XAU (Daily)
18Oct07 01Nov 15Nov 29Nov 13Dec 27Dec 10Jan 24Jan 07Feb 21Feb
PrUSDOzs
750
800
850
900
The trend remains positive, but gold must now breach trendline resistance to signal the next phase of the trend towards $1,080
USD/XAU (Monthly)
Jan00 Jul Jan01 Jul Jan02 Jul Jan03 Jul Jan04 Jul Jan05 Jul Jan06 Jul Jan07 Jul Jan08
PrUSDOzs
300
400
500
600
700
800
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Silver
0.000
20.000
40.000
60.000
80.000
100.000
Jan-07 Apr-07 Jul-07 Oct-07 Jan-08
Contracts000s
8
10
12
14
16
18
20
US$/oz
Non-Commercial Non-ReportableSettlement Price
Silver staged a stronger gain than gold during February, reflecting
its innately higher level of volatility. The month-end fix of
$19.62 was 14% higher than the opening fix of $17.19 and
47% higher than at the end of February 2007. In common with
gold, the physical demand for silver jewellery and investment
products has remained under pressure, but this is a considerably
smaller component of the market than is the case with gold
at approximately 30% of total demand as compared with over
80% in gold’s case (both figures exclude ETF investment). It
has therefore been less of an influence than in the gold market,
while silver has also been in the grip of speculative, and to a lesser
extent investment, activity.
Trading volumes on COMEX were lively during the month,
with a huge surge on the 26th and 27th when prices soared from
a fix of $18.12 to $19.33 (and ahead of a further gain towards
month-end).
Silver is close to the psychologically important $20 level and
is likely to mount an attack on $20 in the near-to-medium term,
driven both by gold and by technical considerations. The market
is aware of silver’s industrial bias, however, and any retreat from
commodities as an asset class opens the way for sharp falls, so
the metal should be traded with caution.
•
•
•
Comex: Silver Non-Commercial and Non-Reportable Positions
Spot Silver Price; Dollar:Euro Rate Silver, gold and copper; Jan 2007=100
While silver prices gained 14% in dollar terms over the
month the gain in both euro and yen terms was 11%. In
euro terms the average February price was 12% higher than
a year previously. The correlation between silver and the
dollar:euro rate for the month was high at 75%, against a
correlation for the past year of 60%, although this may ease
as the rally runs out of momentum in the medium term.
The net long speculative position on COMEX dropped to
19,232 tonnes on 26th February from 23,393 tonnes,
with a sharp increase in small-scale short positions. Open
interest figures for the final week of February would tend
to confirm anecdotal evidence that the strength of the late
rally was boosted by substantial short covering, and this
speculative long position may therefore show a sizeable
increase in early March.
Silver’s correlation with gold over February was 91% against
an a average of 82% over the previous twelve months,
confirming the speculative nature of recent moves and how
gold and silver have been working in tandem. The correlation
with copper, at 77%, against an average for the previous
twelve months of almost zero, reflects the resurgence in
interest in commodities as an asset class, which is likely to
prove supportive for now.
Dollar:Euro & Silver Price
1100
1300
1500
1700
1900
Jan-07 Apr-07 Jul-07 Oct-07 Jan-08
cents/oz
1.20
1.28
1.36
1.44
1.52
US$/€
London Fix US$/€
80
100
120
140
160
180
200
220
Jan-07 Apr-07 Jul-07 Oct-07 Jan-08
Index
Gold Silver Copper
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Silver
0
20
40
60
80
100
120
140
160
180
Apr-06 Sep-06 Feb-07 Jul-07 Dec-07
MillionOunces
8
10
12
14
16
18
20
US$/oz
iShares Silver Trust Holdings London Silver Fix
The Gold : Silver Ratio
ETF Holdings
Silver’s final fix of February at $19.62 was the highest since
late October 1980, when silver was retreating from the
sharp gains of 1978-1980. The recent gains represent an
increase of almost 4.4 times since the start of silver’s bull
market in mid-2003, an average rate of increase of 39%
per annum. Silver’s volatility is well documented and while
the commodities markets, and gold in its own right, remain
firm then silver will continue to thrive. It will, however, fall
sharply when sentiment sours and any early warning signals
should be treated with the utmost respect.
Holdings in the silver Exchange Traded Fund dropped in the
first week of February, and fell to 5,056 tonnes on the 7th
before recovering to 5,072 tonnes. Interest revived later
in the month, with a 77 tonne increment on 21st February
and then 216 tonnes added as prices surged in the last week
of February. Holdings were thus 5,365 tonnes on 28th
February, metal content value $3.3 billion. The London-
based ETC shed 135 tonnes to 300 tonnes.
The gold:silver ratio ended February at 49.5, after averaging
52.6 over February and 52.0 over the year to end-February
2008. The fall reflects both how silver and gold have been
dominated by speculative activity, and with short covering
giving especial fire to the speed of silver’s late rally, a
contraction in the ratio was inevitable. This is the lowest
level since late June 2007 as the metals were about to
turn upwards once more after a period of drifting lower.
Sentiment is different this time and the ratio will be due to
expand as the latest rally loses momentum and ultimately
turns down.
Turnover on COMEX was healthy during all of February, with
the average for the first part of the month, before the surge
in the final week, averaging 24% more than in February
2007, at 6,150 tonnes. Volumes soared in the final week,
touching 17,237 tonnes on the 27th. This was initially
characterized by two-way trading, with open interest falling
only fractionally, but the subsequent drop in open interest
points to short covering, which aided the speed of the rally
in price and suggests that the move may due to slow down,
if not come to a halt.
Feb % Ch.
US$/oz 2007 Jan-Feb 08 Feb 08 mom yoy
Average 13.38 16.75 17.57 10% 26%
High 15.82 19.62 19.62 N/a N/a
Low 11.67 14.93 16.48 N/a N/a
Prices (based on London fix)
Turnover Open Interest Price (US$/oz)
2007 21,820 115,602 13.38
Dec-07 20,468 145,939 14.36
Jan-08 34,073 174,140 16.05
Feb 47,896 181,781 17.66
Source: COMEX
Comex Turnover and Open Interest(Number of Contracts, 5,000 oz, daily averages)
Gold : Silver Ratio(London gold p.m. fix US$/oz over London silver
fix US$/oz)
40
45
50
55
60
Jan-07 Apr-07 Jul-07 Oct-07 Jan-08
3
Silver
February 27th 2008
Darran Grabham* +27-11-378-7228 [email protected]
Silver A series of rising highs and rising corrective lows dominates both the short– and near-term trends, and above $16.90, a positive view is expressed. Yesterday’s break above $18.50 is an important bullish development for silver, which has already pro-vided an impulsive rally. The bull trend may now encounter resistance around $19.25, so caution is advised at current levels, with the possibility of a secondary retracement occurring.
The $18.50 level is now expected to contain corrective weakness, and trading from the long side above this level is advised. Silver is forecast to trade beyond $19.25, with the next move higher targeting $20.50. Another temporary top may then develop but, within the broader trend, the bull market can now extend to $22 — there are currently no objectives beyond $22. A move back below $18.50 will stabilise the immediate outlook, paving the way for further corrective activity. Silver weakness through $16.90 will confirm that the market has established a near-term top, with additional support provided by $16.19, and $15.23 which provides a move important support point as a break lower will have the potential to trigger a decline to as low as $13.60.
Source: Reuters
Source: Reuters
USD/XAG (Daily)
18Oct07 01Nov 15Nov 29Nov 13Dec 27Dec 10Jan 24Jan 07Feb 21Feb
PrUSDOzs
14
16
18
13.58
15.23
Important breakout
USD/XAG (Weekly)
May06 Jul Sep Nov Jan07 Mar May Jul Sep Nov Jan08 Mar
PrUSDOzs
10
12
14
16
18
11.03
13.58
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Platinum Group Metals
Platinum & Gold Prices
Supply concerns persisted over February, driving
platinum to fresh all time highs across the $2,000
threshold.
Resurgent interest in palladium fuelled by
expectations of substitution gains versus platinum lifted
the metal’s price to levels not seen since the aftermath in
2001 of palladium’s $1,000 price bubble.
After a fairly muted initial response to the South
African power crisis the full effects on rhodium were
appreciated over the month with prices skyrocketing to
above $9,000.
Platinum & Palladium
Once again, platinum prices broke all records over the
month as the market’s bullish tone was maintained by
robust fundamentals, greatly underpinned by the ongoing
South African supply concerns. At the same time, platinum
was further supported by strongly positive sentiment to
the whole precious metals complex against a backdrop
of a sliding greenback, record oil and food prices, and US
wholesale price inflation at levels not seen since 1981. This
was sufficient to maintain gold at elevated levels, although
its gains over the month were relatively modest. By
comparison, platinum turned in a remarkable performance,
gaining 23% from an opening fix of $1,741 to a February
close of $2,150. Within the month, platinum touched a
fresh historic peak on the 21st of $2,180 at the second
fixing session.
•
•
•
Feb % Ch.
US$/oz 2007 Jan-Feb 08 Feb 08 mom yoy
Average 1,305 1,786 1,997 26% 66%
High 1,544 2,180 2,180 N/a N/a
Low 1,112 1,522 1,741 N/a N/a
Platinum Prices (London fixes)
Despite the negative outlook for global growth (including
the potential for a slowdown in new automotive demand),
such concerns were overshadowed by the prospect of a
significant short-fall in South Africa’s platinum supplies this
year and the possibility of a further large deficit. After the
load-shedding of late January, 90% of normal electricity
supplies was restored to the mines in February by the state
power provider, Eskom. However, considerable uncertainty
remains, with the effects of this 10% power reduction
compounding with the ongoing challenges of improving
employee safety and attracting and retaining skilled workers.
Furthermore, it seems that the availability of power is likely
to be a long term problem, with shortages expected to
persist through to 2012.
Supporting the pessimism over platinum supplies, February
saw key reports from some of South Africa’s major
producers, including Anglo Platinum and Impala. Amplats
indicated a loss of some 30,000 ounces of platinum as a
result of the end-January power stoppage and predicted the
Platinum and Palladium PricesPlatinum & Palladium Prices
900
1100
1300
1500
1700
1900
2100
2300
Jan-07 Apr-07 Jul-07 Oct-07 Jan-08
US$/oz
300
340
380
420
460
500
540
580
620
US$/oz
Platinum Palladium (rhs)
1,000
1,200
1,400
1,600
1,800
2,000
2,200
2,400
Jan-07 Apr-07 Jul-07 Oct-07 Jan-08
Platinum
550
650
750
850
950
1050
Gold
Platinum Gold
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Platinum Group Metals
US Dollar: Euro
ETF Securities - Pd Holdings
loss of a further 120,000 in 2008 from the ongoing 10%
power reduction. This came on top of a substantial fall in
refined platinum output last year, which declined to 2.47m
ounces from 2.82m ounces in 2006, as the issues of safety
and skills took their toll. In a similar vein, Impala reported an
initial loss of 10,000 ounces, with a further 10,000 ounces
expected to be shed over the remainder of their financial
year to June 2008.
Regarding the broader economic drivers affecting platinum
prices, expectations for an additional cut in the Fed Funds
rate during the FOMC’s March meeting is now seen as a
given. Dovish Fed policy towards inflation, coupled with
renewed fears over a slowing US economy, drove the dollar
to finally break through the $1.50 resistance barrier against
the euro, dropping past $1.52 at end-month. Briefly
weighing on platinum and gold alike, was news of the US
Treasury’s support for the IMF’s planned sale of a portion
of the Fund’s $98 billion in gold reserves, a decision
necessitated by budget deficits. Although platinum’s
momentum eased following this news, the market in any
case appeared heavy having traded as high as $700 above
its 200 day moving average. Whilst the effect was marginal,
platinum is nonetheless vulnerable to any significant
correction that may occur in gold.
During February, commodity price rises helped fuel
mounting concerns over inflation, particularly oil’s rally to
fresh highs above $100/bbl. This may yet prove supportive
of platinum and gold alike, even at these elevated levels.
What’s more, the IMF food price index and US producer costs
reached levels not seen since the early 1980s. Perhaps
indicative that this trend is set to continue, was the topping
of China’s domestic inflation above 7% in January. The
Platinum 1-month Lease Rate
ETF Securities - Pt Holdings
Dollar:Euro
1.2
1.3
1.3
1.4
1.4
1.5
1.5
1.6
Jan-07 Apr-07 Jul-07 Oct-07 Jan-08
US$/€
US$/€
Platinum Leasing Rates
0
1
2
3
4
5
6
7
8
Jan-07 Apr-07 Jul-07 Oct-07 Jan-08
%
1-month rate
Pt ETF
0
50000
100000
150000
200000
250000
300000
350000
Oct-07 Nov-07 Dec-07 Jan-08 Feb-08
Ounces
Pd ETF
0
20000
40000
60000
80000
100000
120000
140000
160000
180000
200000
Oct-07 Nov-07 Dec-07 Jan-08 Feb-08
Ounces
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Platinum Group Metals
month at $568. However, although palladium supply is
somewhat constrained by the situation in South Africa,
this is significantly less threatening for palladium where
above-ground stocks are believed to exceed one year of
fabrication demand. Instead, this resurgence of investor
interest appears more focused on what the future might
hold, with the expectation of substitution gains versus
platinum (especially in the automotive sector) featuring
prominently.
In Nymex palladium futures, net long positions remained
elevated at 1.36m ounces of as of the 26th February
(latest available data) and are almost certain to have
since gained further ground. Meanwhile, total holdings
in palladium’s two ETFs experienced another upsurge,
growing by just under 200,000 ounces over February for
an intra-month gain of gain of some 63%. Even in Japan,
investors turned to palladium as margin increases on
platinum triggered a return to favour in Tocom futures and
a further measure of the warmth was seen in the shares
of miners North American Palladium and Stillwater Mining
(both biased to palladium production), which have risen
120% and 153% respectively since interest in the metal
was rekindled at the end of January.
NYMEX: Platinum Net Positions NYMEX: Palladium Net Positions
PBoC’s tightening, rapid appreciation of the renminbi and
rising labour wages are likely to feed into global inflationary
pressures over this year, attracting yet more inflows to the
inflation-haven assets.
In looking to platinum’s trading instruments, the already
impressive wave of funds moving into the metal’s two ETFs
since last November saw a steepening in February, with ETF
Securities’ holdings rising by over 132,000 ounces, and
total holdings increasing by over 50% on the end-January
figure. Meanwhile, the trend in positions in Nymex futures
has experienced an atypical near inverse relationship to
the price, with net longs declining by almost 270,000
ounces (or 36%) from their recent peak in January. This is
suggestive of Nymex speculators taking profits in February,
selling in part into strong demand from ETF investors.
Despite platinum’s impressive gains, the undoubted
star performer of February was its lower profile cousin
palladium, which rose by a stunning 41% to close the
Feb % Ch.
US$/oz 2006 Jan-Feb 08 Feb 08 mom yoy
Average 355 420 468 25% 37%
High 382 568 568 N/a N/a
Low 320 363 402 N/a N/a
Palladium Prices (London fixes)
0
200
400
600
800
1000
1200
1400
1600
Jan-07 Apr-07 Jul-07 Oct-07 Jan-08
'000ounces
200
250
300
350
400
450
500
550
US$/oz
Non-Commercial Non-ReportablePalladium Price
0
100
200
300
400
500
600
700
800
Jan-07 Apr-07 Jul-07 Oct-07 Jan-08
'000ounces
1000
1200
1400
1600
1800
2000
2200
2400
US$/oz
Non-Commercial Non-ReportablePlatinum price
Precious Metals Sales and Trading • London 44-20-7815 4210 • New York 1-212-407-5102 • Hong Kong 852-2822-7888Singapore 65-6533-7086 • Dubai 971-4-3300-011 • Tokyo 81-3-4520-6003www.standardbank.com • Reuters prices SBLLMETALS/Reuters direct dealer STPM
Important Information Please Refer to Back Page. This report may be found at www.standardbank.com
Copyright 2006, Standard Bank Plc, Cannon Bridge House, 25 Dowgate Hill, London EC4R 2SB. This document does not constitute an offer, or the solicitation of an offer for the sale or purchase of any investment or security. This is a commercial communication. If you are in any doubt about the contents of this document or the investment to which this document relates you should consult a person authorised under the Financial Services and Markets Act 2000 who specialises in advising on the acquisition of such securities. Whilst every care has been taken in preparing this document, no representation, warranty or undertaking (express or implied) is given and no responsibility or liability is accepted by Standard Bank Plc, its subsidiaries, holding companies or affiliates from time to time (the “Standard Bank Group”) as to the accuracy or completeness of the information contained herein. All opinions and estimates contained in this report may be changed after publication at any time without notice. Members of the Standard Bank Group, their directors, officers and employees may have a long or short position in currencies or securities mentioned in this report or related investments, and may add to, dispose of or effect transactions in such currencies, securities or investments for their own account and may perform or seek to perform advisory or banking services in relation thereto. No liability is accepted whatsoever for any direct or consequential loss arising from the use of this document. This document is not intended for the use of private customers in the United Kingdom. This document must not be acted on or relied on by persons who are private customers. Any investment or investment activity to which this document relates is only available to persons other than private customers and will be engaged in only with such persons. Standard Bank Plc is authorised and regulated in the United Kingdom by the Financial Services Authority (“FSA”) and entered in the FSA’s register (register number 124823). In other European Union countries this document has been issued to persons who are investment professionals (or equivalent) in their home jurisdictions. Neither this document nor any copy of it nor any statement herein may be taken or transmitted into the United States or distributed, directly or indirectly, in the United States or to any U.S. person except where those U.S. persons are, or are believed to be, qualified institutions acting in their capacity as holders of fiduciary accounts for the benefit or account of non U.S. persons (as such terms are defined in Regulation S under the Securities Act); The distribution of this document and the offering, sale and delivery of securities in certain jurisdictions may be restricted by law. Persons into whose possession this document comes are required by Standard Bank Plc to inform themselves about and to observe any such restrictions. You are to rely on your own independent appraisal of and investigations into (a) the condition, creditworthiness, affairs, status and nature of any issuer or obligor referred to and (b) all other matters and things contemplated by this document. This document has been sent to you for your information and may not be reproduced or redistributed to any other person. By accepting this document, you agree to be bound by the foregoing limitations. Value Added Tax identification number 625861525.
IMPORTANT INFORMATION
Precious Metals
Rhodium
In clearly maintaining its position as the most expensive
metal within the complex, rhodium again set new record
highs, crossing over the $9,000 threshold this month.
Unrelenting demand in the form of autocatalysts (which alone
has surpassed annual mine production four years running;
according to JM) and the power-related supply crisis in South
Africa - a source of 86% of the metal’s production in 2007
- led to a price boost just short of $1,700, or 24% from end-
January. With rhodium now showing resilience even at current
levels, prices remain fundamentally underpinned by ongoing
worries over South Africa, and a foray towards $10,000 looks
increasingly possible.
Rhodium Prices
Source: Johnson Matthey - basis 8am offer
Rhodium Prices
2000
3000
4000
5000
6000
7000
8000
9000
10000
Jan-06 Jun-06 Nov-06 Apr-07 Sep-07 Feb-08
US$/oz
Avg Low High
Platinum
February 28th 2008
Darran Grabham* +27-11-378-7228 [email protected]
Platinum The bull trend has fulfilled the $2,150 objective level and, as we highlighted in our previous report (dated February 19th 2008), there are currently no additional topside projections, and we advise reducing long positions.
The retracement off the $2,192 high is threatening the sustainability of the trend — from a near-term perspective — and a mildly bearish view is now expressed. A decline through $2,090 is expected to provide the catalyst for a breach of $2,065, tar-geting $1,990. Trading from the short side is preferred, with potential for the anticipated sell-off to extend towards $1,925 — platinum is expected to establish a support base between $1,990 and $1,925. Renewed strength beyond $2,166, prior to a break below $2,065 will threaten the bearish near-term scenario. Additional support levels are highlighted at $1,882, with the $1,754 to $1,700 area providing important downside protection. The primary bull trend prevails, but some form of corrective activity is required to assist in the longer-term forecasting process, and we await near-term developments.
Source: Reuters
Source: Reuters
USD/XPT (Daily)
28Nov07 05Dec 12Dec 19Dec 26Dec 02Jan 09Jan 16Jan 23Jan 30Jan 06Feb 13Feb 20Feb 27Feb
PrUSD
1,600
1,800
2,000
1,507
The steep trend has given way to consolidation, with platinum now vulnerable to a corrective phase.
USD/XPT (Monthly)
Jan00 Jul Jan01 Jul Jan02 Jul Jan03 Jul Jan04 Jul Jan05 Jul Jan06 Jul Jan07 Jul Jan08
PrUSD
400
600
800
1,000
1,200
1,400
1,600
1,800
Primary support is situated at $1,700
Palladium
February 27th 2008
Darran Grabham* +27-11-378-7228 [email protected]
Palladium The convincing break above $400 has produced a sustained surge, and the $470 level did not even hinder the rally. The clear-ance of resistance around $400 has signalled a medium-term trend reversal, with palladium set to enter the $650 to $685 target zone. There is not a great deal of resistance between current levels and $650, as the bear trend from 2001 to 2003 did not establish many corrective peaks. A previous support line — refer to accompanying monthly chart — may provide a bar-rier at $565, so some caution is advised on approach of this level. Initial support levels are situated at $532 and $503.
The $650 to $685 area is regarded as the minimum target zone, but there are currently no firm additional objectives beyond $685, with $730 and $765 highlighted as potential resistance points. However, we advise reducing long positions once $650 to $685 has been achieved. Palladium weakness through the $503 to $470 support zone will delay the bull trend, with a decline through $400 implying that the market has formed a top.
Source: Reuters
Source: Reuters
USD/XPD (Weekly)
Apr05 Jul Oct Jan06 Apr Jul Oct Jan07 Apr Jul Oct Jan08
PrUSD
200
300
400
500
406
255
313
USD/XPD (Monthly)
96 97 98 99 00 01 02 03 04 05 06 07 08
PrUSD
200
400
600
800
1,095
Primary breakout
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