Commodities Weekly Rates, FX, and Commodities Strategy

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1 Rates, FX, and Commodities Strategy TRUMP TRADE TARNISHES PRECIOUS COMPLEX, MIDDLE-EAST ANGST LIFTS CRUDE COMMODITIES UPDATE & WEEK AHEAD DRIVERS 2 TRADE IDEA: SHORT LEAD 4 COMMODITIES CHART LOGIC: LEAD 5 ECONOMIC INDICATORS & DATA CALENDAR 7 COMMODITY PRICE FORECASTS 8 MODEL PORTFOLIO TRADE RECOMMENDATIONS 8 TD SECURITIES GLOBAL METALS INDEX 9 WEEKLY PRICE TABLE 1 ETF MONITOR TABLE & CHARTS 11 CHART PACKAGE 13 RESEARCH TEAM 21 Commodity Price Percent Change (22-Sep-17 to 29-Sep-17) Weekly Commodity Movers & Shakers AECO NG Zinc 4.2% 41.3% AECO Natural Gas prices surged as volatility ensues at low prices due to daily maintenance. Uranium WTI Palladium Henry Hub NG 2.5% 2.% 1.7% 1.6% Zinc prices continued to rally this week, marking a sharp contrast with the recent correction across the broader base metal complex, as its tighter fundamentals continue favor the metal over its peers. Change in Price (%) Brent Nickel S&P GSCI Index Copper Lead Coal Heating Oil -.3% 1.2%.7%.3%.3%.2%.1% Palladium prices rallied, despite recent pressure in the precious metals complex, sending the Platinum to Palladium ratio to its lowest level in 16 years. Gold prices continued to retrace, as the market continued to wager that the Fed may well hike rates again this year (currently pricing suggests a 7% probability of doing so), while uncertainty over who will be the next Fed Chair emerged. Gold Silver Platinum -1.3% -2.% -2.2% As we expected, Aluminium prices turned lower, as skyhigh inventories and relatively looser fundamentals have begun to see fears of metal scarcity subside. Molybdenum -2.5% Aluminum -2.6% Gasoline -3.7% Disclaimer: This report is a marketing communication. It has not been prepared in accordance with legal requirements, as outlined in the UK FCA s COBS, designed to promote the independence of investment research and is also not subject to any prohibition of dealing ahead of the dissemination of investment research, although as a matter of policy TD Securities requires its employees not to deal ahead of the dissemination of this report. 1

2 COMMODITIES UPDATE & WEEK AHEAD DRIVERS Middle East supply risk, OPEC discipline and spec long inspired oil rally negates negative impact of metals complex Kurdish supply risk, strong demand and possible OPEC/ Russia supply limit extension sends crude to the upper bound but more needed for takeoff The re-emergence of the Trump trade, as US tax cuts back on the agenda, firm data and "hawkish" Fed working against gold, silver and platinum Palladium traded above platinum for the first time in 16 years but premium set to have modest reversal soon Seasonal factors, strengthening USD, weakening CNY and profit taking ahead of Chinese holidays keeps base metals looking toward lower levels Percent (%) Rate Hike Expectations Pressure Gold 3 Prob of Dec 217 Hike ( ) 25 Gold Price (RHS) Apr 1 May 1 Jun 1 Jul 1 Aug 1 Sep 1 Oct 1 1,35 1,33 1,31 1,29 1,27 1,25 1,23 1,21 1,19 Steeper Curve Continues To Weigh On Precious Metals Price ($) Despite a material slump in the base and precious metals, the strong performance recorded by the broad petroleum complex still managed to send the S&P GSCI Index some 3.3 percent above the level of a month earlier. This story was repeated last week, as strong WTI and Brent performance left the broad commodity index on a modestly stronger footing than in the previous week. Signals coming from OPEC that global and US inventories are set to drop quickly have prompted specs to take aggressive long oil positions in September, which drove crude and petroleum products higher through the last thirty days. The cartel and Russia are both implying that they are ready to extend the current restrictive supply regime for all of 218, which suggests that current limitations on imports in to the US will likely remain in force for the next year as well. The return of Texas refining capacity in the aftermath of Hurricane Harvey and weak US drilling activity helped to rally crude again last week. Emerging Middle-East supply risk, in the aftermath of the Kurdish independence vote which triggered threats from Turkey that it will close pipeline access to Kirkuk region oil flows, all worked in tandem to propel Brent and WTI to the upper bound of the trading range, with the global benchmark topping $59.49/bbl and the North American one hitting a high of $52.86/ bbl. In sharp contrast to the energy complex, the metal sector performed relatively poorly through September and last week. Gold, silver and platinum reacted negatively to "hawkish" statements from Fed Chair, Janet Yellen, which left the door wide open for a December rate hike. Indeed, traders assigned a 7 percent probability that the US central bank will pull the trigger on higher rates in December, at the same time it said it will reduce the Fed balance sheet by $1 billion per month for the next three months, to start, while uncertainties with regards to the next Fed Chair have started to emerge. Aluminium, copper and nickel were also hit by the new currency environment, and they responded to profit taking ahead of Chinese holidays which are very likely to reduce long interest ahead of slowing seasonal demand trends. If the Fed's renewed hawkish stance was not negative for gold and its peers, the US president Donald Trump and the Republicans followed with a potentially highly simulative tax plan announcement. The resulting US stocks rally, a jump in yields and a firming USD went a long way to hike both the cost of carry and opportunity cost of holding zero-yielding precious metals such as gold, silver and platinum. The market once again wants to believe 2

3 that lower US corporate and personal taxes would set in motion faster economic growth, which would close the output gap at an accelerated pace and force the Fed to tighten policy. In addition, bond yields moved higher on the concern that an unfunded tax plan could sharply increase the federal deficit. So, as negatively as the gold market has reacted, there is still hope that gold can do better long term. Perhaps this is why there seems to be support near the $1,27-5/oz. The ongoing divergence between palladium platinum and gold has resulted in palladium trading above platinum for the first time in 16 years. Palladium bested its much better-known peer metal platinum for the first time in sixteen years this week, as investors searched for ways to bet on trends in the automotive market, and in order to capitalize on palladiums lack of correlation with gold along with the very strong supply-demand fundamentals into 218. Renewed Middle East Supply Risk Sends Crude to the Upper Bound But Too Early for Takeoff into $6 territory The combination of a greater than expected oil inventory draw of 1.8 million bbls vs an expected build of 3.1 million and risks associated with the Kurdish referendum, which may prompt Turkey to stop exports from the region went a long way to propel crude oil higher last week. The oil inventory data turned sentiment positive, as did the news that US exports grew by 562k bbls/d to a record 1.49M bbls/d and signs that demand remains strong. The market concluded that the US oil market is tightening. But crude did not take off significantly until signs pointing to renewed Middle East instability emerged, which could limit exports to the rest of the world. The possibility for supply interruptions of Iraqi oil flows to the rest of the world, after the strong Kurdish pro-independence vote, was the key catalyst behind the robust move higher. Iraq's Kurdish enclave controlled by the KRG holds more crude oil reserves than Nigeria and ships just under 6, bbls/d through pipelines running crossing Turkey to the Mediterranean port of Ceyhan. And, Turkey's Erdogan is threatening to turn off the spigots in an attempt to reduce the appetite for independence. While we expect WTI to move into mid-$5s in the not too distant future and Brent continuing to challenge $6 into 218, it is possible that the market is setting up for a modest reversal as drilling in the US moved off the bottom and as refinery activity moderates somewhat. Libya's intent to boost production by 3% before yearend and the surrounding OPEC supply intentions, along with technical resistance should also keep crude from breaking out, particularly Brent. Palladium on a Tear Vs Platinum But Relative Performance Could Swing the Other Way due to Positioning, Technicals and Stabilizing Gold Palladium bested its much better-known peer metal platinum for the first time in sixteen years last week, as investors searched for ways to bet on trends in the automotive market and take a position in a precious metal which is not very much correlated to gold. Palladium and platinum are both used to reduce harmful fumes from cars powered by gasoline and diesel, respectively. And, both are projected to have a very tight primary supply-demand balance. Oil Needs A Catalyst To Break Higher Indexed [Jan 3, 217 = 1] Palladium Marches To Its Own Beat Gold Silver Platinum Palladium 95 9 Jan Feb Mar Apr May Jun Jul Aug Sep Oct 3

4 Drivers, particularly in Europe, have started to switch from diesel to gasoline cars, particularly small vehicles, because of concerns over particulate matter production and risk of driving bans in cities such as Paris and London. In sharp contrast, palladium has been benefiting from strong US and developing markets' auto sales, which typically use gasoline engines and palladium loaded autocatalysts. Platinum Near Lows... Less diesels means relatively less demand for platinum. Meanwhile the growing appetite for electric vehicles should benefit palladium, as they will increasingly be gasoline hybrids, which we assume to have similar palladium loadings to gasoline vehicles. However, with spot palladium trading at $912/oz and platinum at $913/oz, fabricators may well start to substitute one metal for another in some uses. This may be for no other reason than to assure supply over a long period. Simultaneously, most miners are losing money and the demand outlook continues to be positive for platinum, as Europe recovers from the lows. At the same time, US and China demand growth is likely to moderate. Just from a value perspective, it is likely that platinum should outperform for a while....while Palladium Upside Already Priced In Contagion To Pressure Lead Prices Following a robust rally across the complex throughout this summer, lead prices have continued to follow sister-metal Zinc higher. But while most of the complex has entered into a corrective mode over the past several weeks, lead has held firm near the top of its range due to its stable demand profile and tight supply. Although the prospects for lead appear positive relative to the base metals complex headed into 218, the market for lead is not as tight as zinc. We expect that lead prices will follow the base complex lower, as the PBoC is set to return to a tightening rhetoric, while slower Chinese growth will impact demand for the metal and refined lead imports may fill local shortages preventing a sustained supply-squeeze in the short term. For more information, please refer to page 5 For these reasons, we are recommending entering into a Short Lead position: Entry: $2,516.5, Stop: $2,6; Target: $2, Platinum/Palladium Ratio Falls to 16 Year Low 1.5 Bart Melek Platinum/Palladium Ratio

5 LEAD OUTPERFORMING ON THE DOWNSIDE Daniel Ghali, Commodity Strategist Ryan McKay, Commodity Strategist After a robust base metal rally throughout the summer, which saw the majority of industrial metals reach multi-year highs, most of the complex has entered a corrective mode over the past several weeks. In sharp contrast, lead has held firm near the top of the range due to its stable demand profile and tight supply. But while the prospects for lead appear positive relative to the complex into 218, it is not quite as tight as the zinc market, and we expect the metal to will follow the complex lower amid slower Chinese growth and as PBoC tightening rhetoric impacts sentiment. Indeed, contagion of the broader base metal correction should eventually see lead retreat from upper bound of the recent trading range. For those reasons we would recommend going short lead near the top of the range, should the opportunity present itself. Still, any correction should be modest with firm support near $2,34/t. Demand for lead comes mainly from batteries in automobiles, rather than real estate, manufacturing or construction. China still remains the biggest market, followed by the US and Europe being the next largest combined representing about 6% of Chinese demand. While new auto sales in the US have struggled of late and are a negative for lead, this still bodes well for lead used in replacement batteries throughout the year and especially during winter months. On the other hand, European autos are performing well, as is the European economy. Chinese autos have held strong, despite less tax incentives in 217. Apart from traditional auto Correction In The Cards But Support Not Too Far Away sales, the growth in e-bikes in Asian and European markets, along with the gradual increase in electric vehicles, should provide some additional demand growth for batteries going forward. All of this has kept lead bid and suggests that resilient demand should help lead outperform the complex in relative terms. But this does not mean that absolute declines are not possible. A weaker than anticipated Chinese economy would indeed negatively impact lead, as 5% of total global consumption comes from the country, and the auto sector would be impacted by tighter policy. Furthermore, lead has a strong correlation to the other base metals, which has decoupled of late, but we expect million units US Battery Replacement Demand Should Remain Strong Yr Ag 5 Yr Max/Min Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Tax and Rate Environment Suggests Auto Growth Plateauing 8 8. China Automobile Sales Growth ('s) (2) China Automobile Sales Growth (y/y) China 1yr Benchmark Rate (4) China 1yr Benchmark Rate 5

6 that it will come into play the longer the base metals remain under pressure. These downward pressures should be enough to outweigh a differing demand profile and see prices retreat from the upper bound. The supply side has also kept the metal supported at the upper bound. The market for lead is one of the tighter among the complex, as voluntary production cuts at large producers have also accompanied an environmentally driven curb on production in China. As a result, lead inventories have been rapidly declining, particularly in China, which has fueled concerns of scarcity. Adding fuel to the flames, sanctions on North Korea, a significant exporter of lead concentrate to China, have provided further upside to the rally. Indeed, inventory stocks have been rapidly drawing in China and have reached critically low levels ahead of peak demand season, but on the historically larger LME market, inventories have relatively stabilized, while imports of refined metal in China have sharply increased this year and higher scrap prices will attract recyclers to fill the gaps and could well serve to curb any shortfall induced by the lacking mine supply and a tight concentrate market. Furthermore, sanctions on North Korea have restricted the flow of ore to China, leading market observers to hypothesize that further tightness in the market lies ahead. However, although China imports approximately 12 percent of its lead concentrate from North Korea, the material from the Korean peninsula is of far lower quality than that of its peers, and in fact only represents approximately 1 percent of China's total lead consumption. Considering the lower grades in Korean ores, we do not expect the sanctions to materially add to the market scarcity. Therefore, it is expected that the rally may be running out of steam, as talk of any further scarcity in the near term may be overblown. Jan 216 = 1 Tonnes , 14, 12, 1, 8, 6, 4, 2, Contagion From Peers To Weigh On Lead Prices 21d Rolling Correlation (rhs) 9 Peer Metals Price Index Lead Price Index 8 Jan-16 May-16 Sep-16 Jan-17 May-17 Sep-17 Refined Lead Imports May Fill Local Shortage Refined Lead Imports in China Shanghai Lead On Warrant Stocks , 8, 7, 6, 5, 4, 3, 2, 1, 23-Oct Mar Aug Jan Jun Nov Correlation Should the Middle Kingdom economy slow even modestly in the second half of 217, as we expect, this along with a weakening CNY and the likely return of rhetoric from the PBoC on tightening policy after the National Congress should see demand expectations for all base metals wane. Lead would not be completely immune, as there would be a degree of contagion across the complex, as demonstrated by the tight correlations among the components contained within the base metals index. In addition, the supply side may not be as tight as advertised, with remedies to current tightness available and as North Korea sanctions prove to be less severe than anticipated. That being said, we expect base metals to remain under pressure moving forward, and lead is projected to join the complex in its journey lower from the current highs. 6

7 ECONOMIC INDICATORS & DATA CALENDAR A fairly busy week on the economic data front in the US will see the release of ADP employment, Markit services and composite PMIs, ISM non-manufacturing, trade balance, factory, durable goods and capital goods orders and wholesale inventories data, along with the most important release, the September jobs report. In addition to the macroeconomic data, there are several Fed officials scheduled to speak this week. Given that the Fed is data dependent, and that Janet Yellen stood firm on the dots in the latest FOMC meeting suggesting one more hike in 217 economic data released into December will be of utmost importance. The September jobs report, which the Fed will be watching closing, will most likely set the tone for precious metals prices moving forward. This release may have plenty of distortion due to the hurricanes in Texas and Florida, but an above consensus number and signs of underlying wage growth would keep the precious metals under pressure around the 2dma of $1,272.oz. But no major rout is expected, as uncertainties surrounding who the next Fed Chair will be a hawk or a dove the lack of inflation in the system and technicals should see investors stay put for now. On the other hand, disappointments in the data could see the market start to question the Fed's narrative once again and could thereby have the potential to send gold along a trajectory toward $1,3/oz. Apart from the economic data in the US, any updates on the proposed tax plan or surprises from the ECB minutes could have potential to jolt markets as well. Traders will also take note of European retail sales, PPI and Markit PMI as they seek to gauge the economic momentum underlying the Eurozone. In China, markets remain closed and are set to reopen next Monday, as the investing public celebrates the country's Mid-Autumn Festival and National Day. Considering the lack of Chinese participation this week, we may observe some unusual price action, but base metal traders around the world will be trying to interpret the latest Chinese manufacturing data while also keeping a close eye on global economic performance. The mixed manufacturing data that came from China over the weekend could add further price uncertainties this coming week. The official data, which focuses on larger state-owned firms, came in above expectations and was the fastest pace of growth since April 212, while the Caixin manufacturing PMI, which focuses on smaller private companies, came in below expectations and lower than last month's reading. The official numbers suggest demand is strong and that China could be in for another impressive quarter of growth, while the Caixin results were less optimistic as they showed input and output prices at their highest this year, which could weigh on profitability. With Chinese traders out of the market, there could be less appetite to take long positions and we could see profit taking. Base metal prices could continue to retrace amid lower volumes, and we expect that copper, aluminium and nickel prices may be the hardest hit across the complex, considering that their fundamentals remain loose. That being said, stronger than anticipated data releases in the US and Europe this week could keep prices supported. Moreover, the Phillipines' new environmental minister is set to appear in a hearing deciding upon his fate, after several consecutive deferrals. Considering that the same hearing saw his predecessor ousted, a failure to confirm his nomination should see an increase in volatility in nickel prices. Energy market participants will continue to monitor the high frequency inventory and rigs reports, which unsurprisingly remain important. Still, developments regarding Middle-East tensions will continue to be of critical importance, as export flows to the rest of the world could at risk. The Kirkuk region exports nearly 6, kbpd of crude oil. Ryan McKay, Release Consensus Prior TUESDAY (October 3) 5: EUR PPI m/m (Aug).1%.% 5: EUR PPI y/y (Aug) 2.3% 2.% /217 USD Wards Total Vehicle Sales (Sep) 17.1m 16.3m /217 USD Wards Domestic Vehicle Sales (Sep) 13.m 12.48m WEDNESDAY 4: EUR Markit Eurozone Services PMI (Sep F) : EUR Markit Eurozone Composite PMI (Sep F) : EUR Retail Sales m/m (Aug).3% -.3% 5: EUR Retail Sales y/y (Aug) 2.6% 2.6% 7: USD MBA Mortgage Applications (Sep) % 8:15 USD ADP Employment Change (Sep) 138k 237k 9:45 USD Markit US Services PMI (Sep F) :45 USD Markit US Composite PMI (Sep F) : USD ISM Non-Manf. Composite (Sep) :3 USD DOE U.S. Crude Oil Inventories (Sep) -275k -1846k 1:3 USD DOE Cushing OK Crude Inventory (Sep) k 1:3 USD DOE U.S. Gasoline Inventories (Sep) 1k 117k 1:3 USD DOE U.S. Distillate Inventory (Sep) -1927k -814k 1:3 USD DOE U.S. Refinery Utilization (Sep).8% 5.4% 1:3 USD DOE Crude Oil Implied Demand (Sep) :3 USD DOE Gasoline Implied Demand (Sep) :3 USD DOE Distillate Implied Demand (Sep) THURSDAY 4:1 EUR Markit Eurozone Retail PMI (Sep) :3 USD Challenger Job Cuts y/y (Sep) % 7:3 EUR ECB account of the monetary policy meeting (Jan 8:3 USD Initial Jobless Claims (Sep) 265k 272k 8:3 USD Continuing Claims (Sep) 1949k 1934k 8:3 USD Trade Balance (Aug) -$42.7bn -$43.7bn 9:45 USD Bloomberg Consumer Comfort (Oct) : USD Factory Orders (Aug) 1.% -3.3% 1: USD Factory Orders Ex Trans (Aug) --.5% 1: USD Durable Goods Orders (Aug F) 1.7% 1.7% 1: USD Durables Ex Transportation (Aug F) --.2% 1: USD Cap Goods Orders Nondef Ex Air (Aug F) --.9% 1: USD Cap Goods Ship Nondef Ex Air (Aug F) --.7% 1:3 USD EIA Natural Gas Storage Change (Sep) :3 USD EIA Working Natural Gas Implied Flow (Sep) /5 AUD Coal Export Volumes MT (Aug) m 1/5 AUD Thermal Coal Export Volumes MT (Aug) m 1/5 AUD Coking Coal Export Volumes MT (Aug) m FRIDAY 8:3 USD Change in Nonfarm Payrolls (Sep) 8k 156k 8:3 USD Two-Month Payroll Net Revision (Sep) :3 USD Change in Private Payrolls (Sep) 74k 165k 8:3 USD Change in Manufact. Payrolls (Sep) 1k 36k 8:3 USD Unemployment Rate (Sep) 4.4% 4.4% 8:3 USD Average Hourly Earnings m/m (Sep).3%.1% 8:3 USD Average Hourly Earnings y/y (Sep) 2.5% 2.5% 8:3 USD Average Weekly Hours All Employees (Sep) :3 USD Labor Force Participation Rate (Sep) % 8:3 USD Underemployment Rate (Sep) % 1: USD Wholesale Trade Sales m/m (Aug).% -.1% 1: USD Wholesale Inventories m/m (Aug F) 1.% 1.% 13: USD Baker Hughes U.S. Rig Count (Oct) : USD Baker Hughes U.S. Rotary Gas Rigs (Oct) : USD Baker Hughes U.S. Rotary Oil Rigs (Oct) : USD Consumer Credit (Aug) $15.58bn $18.499bn /217 USD Venezuela Crude Oil Basket CNY (Oct) SATURDAY 1/18 CNY Foreign Direct Investment YoY CNY (Sep) % 1/8 CNY Foreign Reserves (Sep) $398.bn $391.5bn SUNDAY 21:45 CNY Caixin China PMI Composite (Sep) :45 CNY Caixin China PMI Services (Sep) MONDAY (October 9) 4:3 EUR Sentix Investor Confidence (Oct) Source: Bloomberg *Eastern Standard Time Daniel Ghali 7

8 COMMODITY PRICE FORECASTS: Commodity Spot Annual (Avg of forward month contracts) Price Q1A Q2A Q3F Q4F Q1F Q2F Q3F Q4F F 218F Precious Metals Gold 1 $/oz 1,274 1,219 1,257 1,279 1,275 1,3 1,3 1,325 1,325 1,25 1,258 1,313 Silver 1 $/oz Platinum 1 $/oz , 1,25 1,5 1,75 1, ,63 Palladium 1 $/oz Base Metals #N/A Invalid Security Copper 2 $/lb $/tonne 6,446 5,838 5,668 6,349 6,275 6,393 6,393 6,54 6,54 4,867 6,32 6,449 Zinc 2 $/lb $/tonne 3,273 2,778 2,591 2,935 3,5 3,35 3,35 3,195 3,195 2,91 2,839 3,272 Lead 2 $/lb $/tonne 2,519 2,278 2,156 2,337 2,425 2,646 2,646 2,469 2,469 1,867 2,299 2,557 Nickel 2 $/lb $/tonne 1,35 1,265 9,29 1,55 1,475 1,692 1,692 11,23 11,23 9,597 1,125 1,858 Aluminium 2 $/lb $/tonne 2,83 1,853 1,95 2,7 2,7 2,2 2,28 2,28 2,116 1,64 1,959 2,48 Molybdenum 3 $/lb Iron Ore 4 $/tonne Ene r gy #N/A Invalid Security WTI Crude Oil $/bbl Brent Crude Oil $/bbl Heating Oil (ULSD) $/gal Gasoline $/gal NYMEX Natural Gas $/MMBtu AECO Natural Gas $/MMBtu CAD/GJ Uranium $/lb New castle Thermal 5 $/tonne Notes: F = Forecast, E = Estimate, A = Actual; 1. London PM Fix; 2. LME; 3. Molybdenum equivalent to moly oxide, FOB USA; 4. CFR China, 62% Fe, dry; 5. Japan CIF steam coal marker-newcastle MODEL PORTFOLIO TRADE RECOMMENDATIONS ONGOING MODEL TRADES Trade Entry Date Entry Stop Current Target P/L Short Lead 4 2/Oct/17 2, ,6. 2,518. 2, % Short Aluminium 3 2/Sep/17 2,188. 2,25. 2,11. 1,96. 4.% Short Brent/WTI Spread 2 11/Sep/ $.1/bbl Long Oil (Brent) 1 15/Nov/ % CLOSED MODEL TRADES Trade Entry Date Entry Exit Exit Date Target P/L Short Gold/Silver ratio 27/Jul/ /Sep/ % Long Platinum 12/May/ /Aug/17 1, % Short Aluminium 11/Aug/17 2,46. 2,136. 1/Sep/17 1, % Short Aluminum 17/Feb/17 1,9. 1,98. 8/Aug/17 1, % Short Palladium 23/Jun/ /Aug/ % Short Copper 28/Nov/16 5,881. 6,28. 25/Jul/17 5, % Long Oct 17 Gold 124 Straddle 5 3/Mar/ /Jun/ % Short Copper/Zinc ratio 17/Jan/ /Jun/ % Short Platinum/Palladium ratio 17/Jan/ /May/ % Short Gold 24/Feb/17 1,257. 1,215. 8/Mar/17 1, % Short Gold/Silver ratio 15/Nov/ /Mar/ % Notes: Spread trades P&L calculated on absolute basis; 1. Trade from the 217 Global Outlook; 2. Trade from September 11, 217 Commodities Weekly; 3. Trade from September 2, 217 Chart Logic; 4. Trade from October 2, 217 Commodities Weekly 5. Option trade from Mar 3, 217 Chart Logic, where 19.1 was the premium paid. Closed prior to expiration to preserve premium. 8

9 TD SECURITIES GLOBAL METALS PRICE INDEX The TD Securities Global Metals Price Index (TDGMPI) is an aggregate, weighted price measure based on a basket of spot base and precious metals. TDGMPI weights are based on the metals importance in the global economy, with USD dollar value used as a proxy. The TDGMPI encompasses nine metals. The weights are based on a rolling 5 year average contribution of each metal to the total value of global metal production. The nine metals and their current weights are: copper (26.3%), aluminum (16.6%), nickel (5.5%), zinc (4.6%), lead (4.%), gold (35.6%), silver (4.6%), platinum (2.1%) and palladium (.8%). Thus, metals which have a greater impact on the value of world metal production receive a greater weighting in the index. This index can be used as an analytical tool, mainly to track how the metals sector is performing over time, but also to compare performance of each of the individual metals and sub-sectors (precious metals, base metals) to the index as a whole. $bn TD Global Metals Price Index TD Base Metals Price Index TD Precious Metals Price Index $bn TD Global Metals Price Index (lhs) TD Base Metals Price Index (rhs) TD Precious Metals Price Index (rhs) Source: TD Securities 9

10 WEEKLY PRICE TABLE Commodity Markets-- Weekly Update Commodity 3-Oct a week ago a month ago a year ago year to date TD Global Metals Price Indices TD Global Metals Price Index ($bn) TD Global Precious Metals Price Index ($bn) TD Global Base Metals Price Index ($bn) Precious Metals Gold Spot (US$/oz.) Silver Spot (US$/oz.) Platinum Spot (US$/oz.) Palladium Spot (US$/oz.) Base Metals & Minerals Aluminum (US$/tonne) Copper (US$/tonne) Zinc (US$/tonne) Nickel (US$/tonne) Lead (US$/tonne) Molybdenum (US$/lb.) Cobalt (US$/lb) Tin (US$/lb) UxC Uranium U38 Swap (US$/lb) Bulks Thermal Coal Baltic Dry Index Energy WTI Crude Oil (US$/bbl.) Brent Crude Oil (US$/bbl.) Heating Oil (US$/gal.) Gasoline, RBOB (US$/gal.) NYMEX Natural Gas (US$/mmbtu) AECO Natural Gas (US$/mmbtu) Denatured Ethanol (US$/gal.) Softs USDA No. 1 Hard Red Winter Wheat (US$/bush USDA No. 2 Yellow Corn (US$/bush) USDA No. 1 Yellow Soybeans (US$/bush) Coffee (US$/lb) Cotton (US$/lb) Lean Hogs (US$/lb) Cattle, Feeder (US$/lb) Cattle, Live (US$/lb) Equities S&P S&P TSX Composite S&P TSX Global Gold S&P TSX Global Mining S&P TSX Energy Index XAU Philly Gold & Silver Index FTSE Nikkei Currencies CAD/USD Euro/USD Japanese Yen British Pound Yuan US Trade Weighted Dollar (1973=1)

11 ETF MONITOR TABLE TD Securities: Commodities Trade Strategy - Precious Metals ETF Monitor Latest Holdings 5-Day Change 3-Day Change Year-Ago Change Last Updated Date Ounces Value ($US Millions) Ounces Value ($US Millions) Ounces Value ($US Millions) Ounces Value ($US Millions) Total GOLD ETFs 61,863,341 78, ,361 (1,712) 1,771,512 (1,358) (2,161,8) (5,179) SPDR Gold Trust 9/29/217 27,799,256 35,48 275,536 (669) 1,55, (2,716,54) (4,616) ETF Securities 9/26/217 9,48,577 11,984 17,698 (325) (177,244) (82) (481,912) (988) ishares 9/29/217 7,348,396 9,36 193,661 (18) 321,43 (14) 6,611 (199) ZKB 4/21/217 4,718,695 6,1 (15,963) (196) (15,963) (35) 284, Source 9/29/217 3,778,769 4,813 (2,249) (143) 117,833 (7) 726, Sprott Physical 9/29/217 1,746,574 2,225 (65) 9 (15) (21,467) (94) Central Fund of CA 9/29/217 1,672,644 2,13 (62) (11) (63) Xetra Gold 8/26/217 1,575,65 2,6 (58) (95) (6) Julius Baer 9/14/217 1,481,832 1,887 (24,4) (87) (14,9) (19) (36,2) (14) NewGold 9/26/217 1,6,465 1,351 (81) (39) (11,771) (79) (192,76) (292) Central Gold Trust 1/19/216 71, (841) (27) (841) (43) (3,317) (31) Royal Canadian Mint 8/26/217 3, (11) (18) (931) (13) Goldist 8/26/217 51, (2) (3) (2) Total SILVER ETFs 641,25,187 1, ,768 (359) (11,96,92) (1,5) (23,497,558) (1,853) ishares 9/29/ ,757,4 5,429 (185) (4,531,7) (492) (36,152,2) (1,399) Central Fund of CA 8/26/217 75,644,12 1,257 (43) (95) (166) ETF Securities 9/26/217 81,254,28 1,35 () (46) (6,797,97) (224) 6,889,34 (49) ZKB 4/21/217 72,846,568 1,21 252,768 (37) 252,768 (87) 2,947,55 (15) Sprott Physical 9/29/217 55,911,9 929 (32) (7) 1,592,57 (93) Julius Baer 9/14/217 13,89, (8) (2,) (18) 99, (29) Claymore 8/26/217 3,373,64 56 (2) (4) (7) Silver Bullion Trust 8/26/217 2,978,23 49 (2) (4) (7) Royal Canadian Mint 8/26/217 2,73, 45 (2) (3) (1,859) (6) Total PLATINUM ETFs 2,233,676 2,35 (8,593) (77) (68,116) (285) 125,87 (88) ETF Securities 9/26/ , (29) (23,455) (115) 144, NewPlat 9/29/ , (64) (26) (31,834) (112) 42,916 (37) ZKB 4/21/ , (2,884) (11) (2,884) (29) 5,89 (21) Swiss & Global 9/14/217 93, (3,5) (6) (7,32) (16) 9,11 Source 9/29/217 8,49 8 (2,146) (2) (2,52) (3) (65,182) (66) Sprott Physical 8/26/217 37, (1) (4) (4,422) (8) Deutsche Bank 9/29/217 26,97 24 (1) (571) (3) (1,355) (13) Total PALLADIUM ETFs 1,48,81 1,365 (21,546) (8) (11,65) (93) (684,322) (18) ETF Securities 9/26/217 43, ,726 (14) (242,579) (83) Standard Bank 4/2/ , ,976 (22) (178,982) (39) NewPall 5/19/ ,88 2 (7,924) (6) (7,974) (2) (54,48) (11) ZKB 4/21/ ,2 177 (12,21) (1) (12,21) (22) (27,627) (14) Source 9/29/217 3,15 3 () 1,169 1 (14,665) () Swiss & Global 9/14/217 86,663 8 (1,6) (1) (2,47) (7) (33,91) (3) Sprott Physical 8/26/217 85, (5) (1,785) (1) Deutsche Bank 9/29/217 9,661 9 (1,471) (2) (1,516) () Note: Totals include more than the listed ETFs, hence do not alw ays add up, and the data updates at different, respective ETF issuer 11

12 ETF CHARTS Gold ETF Holdings Silver ETF Holdings 85 8 Total ETF Holdings (LHS) Spot Gold Price (RHS) 1,9 1,8 8 Total ETF Holdings (LHS) Spot Silver Price (RHS) , Million Ounces ,6 1,5 1,4 1,3 1,2 1,1 $UZ/Oz Million Ounces $UZ/Oz , Respectiv e ETF Issuer 1, , Respectiv e ETF Issuer 1 Platinum ETF Holdings Palladium ETF Holdings 3,5 2, 4, 1, 3, 1,8 3,5 9 Thousands Ounces 2,5 2, 1,6 1,4 1,2 $UZ/Oz Thousands Ounces 3, 2, $UZ/Oz 1,5 Total ETF Holdings (LHS ) 1, 2, Total ETF Holdings (LHS) 5 Spot Platinum Price (RHS) 1, , Respective ETF Issuer 8 Spot Palladium Price (RHS) 1, , Respectiv e ETF Issuer 4 12

13 CHART PACKAGE FORWARD CURVES 1,495 COMEX Gold 21.8 COMEX Silver $US/Troy Oz 1,445 1,395 1,345 1,295 1,245 1,195 $US/Troy Oz , ,95 1, $US/lb LME Copper $US/lb LME Aluminum $US/lb LME Nickel $US/lb LME Zinc

14 CHART PACKAGE FORWARD CURVES (CONTINUED) NYMEX WTI Crude Oil 62 ICE Brent Crude Oil $US/bbl 55 5 $US/bbl (rhs) NYMEX 2:1:1 Crack Spread NYMEX Natural Gas $US/bbl $US/MMBtu NYMEX Coal 25 NYMEX Uranium 9 24 $US/Ton 8 7 $US/Ton

15 CHART PACKAGE VOLATILITY CURVES COMEX Gold COMEX Silver 19 ATM Implied Vol (%) 14 ATM Implied Vol (%) NYMEX Platinum NYMEX Palladium 2 ATM Implied Vol (%) ATM Implied Vol (%)

16 CHART PACKAGE INDUSTRIAL METAL INVENTORIES Days Supply Aluminum Warehouse Inventories Inventory at LME + SHFE (lhs) Aluminum Price (rhs) $US/lb Days Supply Copper Warehouse Inventories Inventory at LME, SHFE, COMEX (lhs) Copper Price (rhs) $US/lb Lead Warehouse Inventories Inventory at LME + SHFE (lhs) Lead Price (rhs) Nickel Warehouse Inventories Inventory at LME (lhs) Nickel Price (rhs) Days Supply $US/lb Days Supply $US/lb Days Supply Zinc Warehouse Inventories Inventory at LME + SHFE (lhs) Zinc Price (rhs) $US/lb

17 CHART PACKAGE PETROLEUM & NATURAL GAS INVENTORIES 59 U.S. Crude Oil Inventory 27 Gasoline Inventory MMbbl MMbbl Oct-28 Nov-25 Dec-23 Jan-2 Feb-17 Mar-17 May-12 Jun-9 Jul-7 Aug-4 Sep-1 Sep-29 Oct-27 Nov-24 Dec Oct-28 Nov-25 Dec-23 Jan-2 Feb-17 Mar-17 May-12 Jun-9 Jul-7 Aug-4 Sep-1 Sep-29 Oct-27 Nov-24 Dec-22 Prior 5yr Range 5yr Avg Source: DOE, TD Securities Prior 5yr Range 5yr Avg Source: DOE, TD Securities 75 Crude Oil Inventory at Cushing, OK 18 Heating Oil (ULSD) Inventory MMbbl Oct-28 Nov-25 Dec-23 Jan-2 Feb-17 Mar-17 May-12 Jun-9 Jul-7 Aug-4 Sep-1 Sep-29 Oct-27 Nov-24 Dec-22 MMbbl Oct-28 Nov-25 Dec-23 Jan-2 Feb-17 Mar-17 May-12 Jun-9 Jul-7 Aug-4 Sep-1 Sep-29 Oct-27 Nov-24 Dec-22 5yr Range 5yr Avg Source: DOE, TD Securities Prior 5yr Range 5yr Avg Source: DOE, TD Securities Operating Capacity Utilization (%) Refinery Utilization 1.% 95.% 9.% 85.% 8.% 75.% Oct-28 Nov-25 Dec-23 Jan-2 Feb-17 Mar-17 May-12 Jun-9 Jul-7 Aug-4 Sep-1 Sep-29 Oct-27 Nov-24 Dec-22 5yr Range 5yr Avg Source: DOE, TD Securities Storage (Bcf) 4,5 4, 3,5 3, 2,5 2, 1,5 1, 5 - US Natural Gas Storage Level 5yr Range 5yr Avg /Dec 27/Jan 24/Feb 24/Mar 21/Apr 19/May 16/Jun 14/Jul 11/Aug 8/Sep 6/Oct 3/Nov 1/Dec 29/Dec Source: EIA, TD Securities 17

18 Rates, FX, and Commodities Strategy CHART PACKAGE COMMITMENTS OF TRADERS Net Contracts 4, COMEX Gold $UD/oz 1,7 Net Contracts 12, COMEX Silver $UD/oz 35 35, 3, 25, 2, 1,6 1,5 1,4 1,3 1, 8, 6, , 1, 5, 1,2 1,1 1, 4, 2, Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17 1 Gold Net Spec Position (lhs) Gold Price (rhs) Silver Net Spec Position (lhs) Silver Price (rhs) Source: CFTC, Bloomberg, TD Securities Source: CFTC, Bloomberg, TD Securities Net Contracts 6, 5, 4, 3, 2, 1, - Net Contracts 8, 6, 4, 2, - (2,) (4,) (6,) NYMEX Platinum Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17 Platinum Net Spec Position (lhs) COMEX Copper Platinum Price (rhs) $UD/oz 1,8 1,7 1,6 1,5 1,4 1,3 1,2 1,1 1, 9 8 Source: CFTC, Bloomberg, TD Securities Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17 Copper Net Spec Position (lhs) Copper Price (rhs) $UD/lb Source: CFTC, Bloomberg, TD Securities Net Contracts 35, 3, 25, 2, 15, 1, 5, - Net Contracts 6, 5, 4, 3, 2, 1, - (1,) (2,) NYMEX Palladium Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17 Palladium Net Spec Position (lhs) NYMEX & ICE Natural Gas $UD/oz Palladium Price (rhs) 1, Source: CFTC, Bloomberg, TD Securities Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17 Natural Gas Net Spec Position (lhs) $UD/MMbtu Natural Gas Price (rhs) Source: CFTC, Bloomberg, TD Securities 18

19 Rates, FX, and Commodities Strategy CHART PACKAGE COMMITMENTS OF TRADERS Net Contracts NYMEX & ICE WTI Crude Oil $UD/bbl 7, , 1 5, 9 4, 8 7 3, 6 2, 5 4 1, 3-2 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17 WTI Net Spec Position (lhs) WTI Price (rhs) Source: CFTC, Bloomberg, TD Securities Net Contracts 45, 35, 25, 15, 5, (5,) (15,) (25,) NYMEX & ICE Brent Crude Oil Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17 Brent Net Spec Position (lhs) Brent Price (rhs) $UD/bbl Source: CFTC, Bloomberg, TD Securities Net Contracts 12, NYMEX Gasoline $UD/gal 35 Net Contracts 8, NYMEX Heating Oil $UD/gal 1, 3 6, 29 8, 6, 4, 2, , 2, - (2,) (4,) Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17 5 (6,) Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17 9 Gasoline Net Spec Position (lhs) Gasoline Price (rhs) Source: CFTC, Bloomberg, TD Securities Heating Oil Net Spec Position (lhs) Heating Oil Price (rhs) Source: CFTC, Bloomberg, TD Securities Net Contracts LME Copper $UD/MT Net Contracts LME Aluminum $UD/MT Aug-14 Nov-14 Feb-15 May-15 Aug-15 Nov-15 Feb-16 May-16 Aug-16 Nov-16 Feb-17 May-17 Aug-17 Aug-14 Nov-14 Feb-15 May-15 Aug-15 Nov-15 Feb-16 May-16 Aug-16 Nov-16 Feb-17 May-17 Aug-17 Copper Net Spec Position (lhs) Copper Price (rhs) Al Net Spec Position (lhs) Aluminium Price (rhs) 19

20 CHART PACKAGE COMMITMENTS OF TRADERS Net Contracts LME Nickel $UD/MT Net Contracts LME Zinc $UD/MT Aug-14 Nov-14 Feb-15 May-15 Aug-15 Nov-15 Feb-16 May-16 Aug-16 Nov-16 Feb-17 May-17 Aug-17 Aug-14 Nov-14 Feb-15 May-15 Aug-15 Nov-15 Feb-16 May-16 Aug-16 Nov-16 Feb-17 May-17 Aug-17 N icke l Ne t Sp ec P osi ti on (l hs) Nickel Pric e (rhs ) Zinc Net Spec Position (lhs) Zinc Price (rhs) Net Contracts LME Lead $UD/MT Aug-14 Nov-14 Feb-15 May-15 Aug-15 Nov-15 Feb-16 May-16 Aug-16 Nov-16 Feb-17 May-17 Aug-17 Le ad Ne t Sp ec Po sition (l hs) Lead Price (rhs ) COMMODITIES RESEARCH TEAM: Bart Melek Global Head of Commodity Strategy bart.melek@tdsecurities.com Ryan McKay Commodity Strategist ryan.mckay@tdsecurities.com Daniel Ghali Commodity Strategist daniel.ghali@tdsecurities.com

21 GLOBAL STRATEGY TEAM Global Strategy Richard Kelly Head of Global Strategy Commodities Strategy Bart Melek Global Head of Commodity Strategy Ryan McKay Commodity Strategist Daniel Ghali Commodity Strategist Global Macro Strategy Annette Beacher Chief Asia-Pacific Macro Strategist Jacqui Douglas Chief European Macro Strategist James Rossiter Senior Global Strategist Brittany Bauman Macro Strategist Robert Both Macro Strategist Global Rates Strategy Priya Misra Head of Global Rates Strategy Gennadiy Goldberg US Rates Strategist Cheng Chen US Rates Strategist Andrew Kelvin Canada Rates Strategist Prash Newnaha Asia/Pac Rates Strategist Global Strategy USA Canada Australia New Zealand UK Europe Emerging Markets FX & Commodities FX Strategy Ned Rumpeltin European Head of FX Strategy Mark McCormick North American Head of FX Strategy Mazen Issa Senior FX Strategist Emerging Markets Strategy Cristian Maggio Head of Emerging Markets Strategy Paul Fage Senior Emerging Markets Strategist Sacha Tihanyi Senior Emerging Markets Strategist Global Disclaimer TD Securities is a trademark of TD Bank and represents TD Securities Inc., TD Securities (USA) LLC and TD Securities Limited and certain investment and corporate banking activities of TD Bank and its subsidiaries. Copyright 215 The Toronto-Dominion Bank. All rights reserved. 21

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