Commodities Weekly Rates, FX, and Commodities Strategy

Transcription

1 Rates, FX, and Commodities Strategy METALS STRENGTH NOT ENOUGH TO OFFSET OIL WEAKNESS COMMODITIES UPDATE & WEEK AHEAD DRIVERS 2 UPDATE FROM LME WEEK 4 ECONOMIC INDICATORS & DATA CALENDAR 6 COMMODITY PRICE FORECASTS 7 MODEL PORTFOLIO TRADE RECOMMENDATIONS 7 TD SECURITIES GLOBAL METALS INDEX 8 WEEKLY PRICE TABLE 9 ETF MONITOR TABLE & CHARTS 1 CHART PACKAGE 12 RESEARCH TEAM 2 Commodity Price Percent Change (28Oct16 to 4Nov16) Weekly Commodity Movers & Shakers Silver Molybdenum 3.8% 3.4% Precious metals get a helping hand from US presidential election uncertainty, weaker USD. Copper Gold Zinc Platinum 3.% 2.3% 1.8% 1.7% Copper posted the best performance among its base metal peers, as Chinese manufacturing numbers improved, and specs increased their net long position to its highest level since 214. Change in Price (%) Lead Palladium Coal Nickel Aluminum Uranium S&P GSCI Index Gasoline 4.6% 5.7% 6.2%.2% 1.6% 1.1% 1.%.2% Zinc hit fiveyear highs on supply worries, as Glencore put its Black Star mine in Australia on care and maintenance. Oil fell as it is said Saudi Arabia threatened to increase production if OPEC/NOPEC could not come to an agreement, and US inventories increased by a record 14.42m barrels. Heating Oil Brent WTI 7.3% 8.3% 9.5% Natural gas recorded a very weak performance as continued warm weather raised fears about winter demand and high inventory levels. Henry Hub NG 1.9% AECO NG13.6% 1

2 COMMODITIES UPDATE & WEEK AHEAD DRIVERS Precious metals outperformed the broadly declining commodities complex last week, as the tradeweighted measure of the USD retraced about 5% of its Decemberhike induced October rally. The souring risk sentiment, which led US stocks to react down to precarious technical support levels near the 2 dma, was also seen as a particularly robust catalyst helping to lift gold and its peers. Much of the latest reaction seems to have partly stemmed from somewhat weakening expectations of a Fed hike, and as Mrs. Clinton's victory seemed to be in doubt with worries about the negative impact a Donald Trump presidency would have on the economy and markets. Indexed (Oct 1, 216 = 1) Metals Getting a Currency Lift S&P Precious Metals Index S&P Industrial Metal Index USD Index (rhs) Oct 1 Oct 19 Oct 28 Oct 6 Nov Base metals fared just fine as well, gaining on the week thanks to the weaker USD, but also to growing optimism about a turnaround witnessed in Chinese economic data. Finally, the crude oil market lost major ground last week, as the fallout from the lack of consensus on the supply control front generated concerns that the crude market would be oversupplied for longer. At least for now, the prospects of a coordinated and impactful production supply agreement that have formed post the postalgiers gathering, both inside and outside OPEC, have evaporated and took prices toward the lower end of the recent trading range. The big focus for this week will be the US election, and the price action has already started in the gold/silver space, as Monday's big selloff again was triggered by the latest FBI statements on the Clinton saga. For our latest thoughts on market reactions to the US elections, see the TD Global Strategy report Trading the US Election GMen Obstruct Gold The gold gains over the past week were the product of a renewed safe haven bid, as uncertainty reared its head ugly over the US election story. The latest revelation that the FBI was once again looking at the Hillary Clinton case hung over the markets. However, this past Sunday evening, the FBI once again squashed the uncertainty by announcing that there would be no reversal of its previous finding to not suggest charges. This has affected the gold /silver market the worst on Monday, down 1.8% and 1.1% respectively, after leading the charge last week. Through the US election volatility, we expect that market participants will refocus on the likelihood of a December hike (very high at this point) but more importantly the evolution of interest rates next year. For now, we still expect that despite a December hike, the Fed will be increasingly conservative next year and leave rates at very accommodative levels. 2

3 This environment of low rates, with increasing headline inflation rates (mainly pushed by energy base effects) will serve to keep real rates boosting the appeal of gold, especially with stock markets looking shaky and potentially setting up for a break lower should the Fed follow through with its rate hikes. Base Metals Back to their Annual Highs Base metals also benefitted from the weaker USD, as well as a follow on of better thoughts about a demand pickup. The latest manufacturing indicators globally, more importantly in China as discussed last week, all seemed to point higher and suggest that raw base metals demand would be needed to manufacture an increasing amount of products. LME Week likely also added an additional set of positive talking points for the price action in base metals, as the gathering seemed to elicit a much more optimistic tone then in years past. We outline our thoughts in more detail on this below. OPEC Discord Derails Oil While we think much of this is negotiating tack by each country, to position themselves individually in the best light prior to a production agreement, we think that ultimately a deal will be reached which generates significantly tighter market conditions next year. Although, most likely a deal will be a much watered down production agreement, with the possibility of reverting to a freeze deal (by another name) not out of the question. In any case, the time between now and the endnovember OPEC meeting will continue to remain rocky, as the negotiation phase will continue to stoke uncertainty amongst market participants, leaving prices to languish at current support levels. But the prospect of a deal is unlikely to take prices much lower than we already see, due to the combined fundamental and technical support floor, very close to current levels. Mike Dragosits Crude oil continued its selloff into a second week, as US inventories finally saw a large catch up in seasonal stockpile builds to combine with the dampening hopes that a strong, coordinated deal between OPEC and nonopec nations to control supply would result out of the Algiers meeting. But Russia has continued to avoid locking themselves into offering production cuts of their own, Brazil has opted out of any deal, and Iraq continues to expect that they will be excluded from any agreement. Additionally, there were conflicting reports that during the ongoing negotiations, Saudi Arabia had "threatened" to increase their own production, if Iran refused to freeze their production Iran immediately exclaimed they were given an exclusion from the Algiers agreement. Lack of Agreement to Control OPEC Supply Forces Crude Down Toward the Lower Bound of the Trading Range 3

4 London Market Seeing Base Metals in a Much Less Morose Light this Year TD Securities Outlook Somewhat More Optimistic than the Consensus Formed at LME Week Gathering The TD Securities team was in London for various LME Week events in recent days. Our group visited with various clients and met a number of key base metals market players ranging from miners, to regional and global commercial bankers, smelters, warehouse operators, brokers, speculative investors and a widerrange of analysts, while we also participated in various seminars and presentations. Reflecting an improved metals sentiment, this year saw fairly healthy (but not peak) attendance levels at the various events, and there was a definite sense that the worst may be over for the base metals market. Indeed, base metals posted a strong performance as LME Week unfolded, with copper challenging the March highs, zinc getting ready to break through resistance, nickel strengthening and aluminium challenging the very top of the cost curve. This is in stark contrast to the quite morose state of affairs we witnessed last October, when the metals market was in middle of a sharp selloff that only reached bottom in the early part of January 216. The more optimistic outlook and the consequently healthy rebound in metal prices, which has also convinced speculative investors to increase their metals and mining company exposure, is in no small way related to a much more stable China outlook. Demand prospects for base metals improved after the Middle Kingdom added considerable stimulus, with the initial price rally triggering an assist from the inflow of fund money. The choppy rally stayed alive through LME week and continued to show strength on Monday. While subject to corrections that will move prices around within the recent trading range, as the Fed tightens policy and specs take easy profits, TD Securities sees conditions that are consistent with keeping the recent positive tone in place for the balance of the year. The pending Fed hike, any unpleasant China data surprise, and the US election were all cited as possible catalysts which could trigger a bit of a price reversal in the nearterm. Uneasy Sense of Optimism But Rally Seen as Getting Long in the Tooth for Now While the LME index is up a very robust 32 percent from the lows posted in midjanuary and the demand outlook is vastly improved, the London air was still thick with unease and uncertainty. Many LME Week participants are concerned that the state of economic activity outside of China is not particularly strong. Indeed, there are worries that even the strong Chinese housing and auto performance could evaporate quite quickly should the level of stimulus lessen or should the country enter some sort of oftcited existential credit crisis. There is a definite sense that the markets may have moved to current highs for nonfundamental reasons a momentum driven rally that is sustained by inflows and not so much by materially improved supplydemand fundamentals. Certainly, TD Securities gets the feeling that metals like copper may have rallied in response to the recent USD decline and that we are at highs that no longer reflect the fundamentals. Aluminium, which is seen to be in a considerable structural oversupply environment, also feels like it has moved above its fundamental drivers, such as supplydemand and cost structure. With the current copper price level near $5,1/t, which also happens to be the very top of the cost curve, our view that the global copper market will be in a rough balance next year prompts us to say that there is a considerable risk of moving lower, not higher. We are unlikely to see upside economic data surprises coming from China or the US, the USD will likely show strength as the Fed gets closer to a December hike and spec net long positioning seems to be topping out. In addition, the hope that mine site disruptions will grow may not materialize and there could be significant outflows from inventory to capitalize on the recent price hike. As such, it may be a good idea to lighten up on copper at these levels and take profits while they are available Copper Skews Signalling Caution on the Upside 5,2 5,1 5, 4,9 4,8 4, Month 25 Delta Vol Skew 4,6 (Calls Minus Puts) 3.7 Copper Price (RHS) 4,5 1 Jul 31 Jul 3 Aug 29 Sep 29 Oct 28 Nov Similarly, with most of the aluminium industry making positive returns, cost structures dropping and the market posting significant surpluses next year, the current level of $1,728/t looks ripe to be sold. New increasingly efficient Chinese smelting capacity and the low RMB will continue to help flood global markets with 4

5 Fundamentals Point To Lower Aluminum Prices Source: Wood Mackenzie Zinc May Finally be Breaking Higher aluminium, drive costs lower, and help generate a one million tonne surplus next year. The fact that the curve is relatively flat, the metal from the expiring aluminium financing deals, and growing surpluses could well force the prompt part of the curve materially lower. So, we suggest to get short aluminium until something changes. While the zinc market has been accelerating since the start of the year, its strong fundamentals should prevent a sizable correction. Indeed, based on the recent price action which saw the metal shoot through strong resistance just above $2,4/ton and the strong likelihood that there will be in a deficit again in 217, there is a strong probability the market may take zinc prices higher later in the year. At the very least, a robust correction is not in the cards. Despite of a 1 percent increase in Chinese mine output and the expected restarts by Glencore, stocks of zinc are likely to remain at levels that tend to generate higher prices. The fact that TCs are at a very low $16/tonne suggest that concentrate markets are tight and that we should not expect a massive improvement in metal availability as well. Similarly, with less material available to Chinese nickel producers from the Philippines and the resulting reduction of quality of stockpiles available to Chinese smelters, the shift to higher quality stainless steels and a stabilizing China all suggests that nickel prices are stable near $11,/tonne. Indeed, as the monsoon season interrupts Philippines production, the sharp declines and lower quality of the current Chinese stockpiles could well prompt specs to bet long nickel. If specs get prices materially above $11,/tonne, the still very large stockpiles of the metal should prompt profittaking behaviour. Bart Melek 5

6 ECONOMIC INDICATORS & DATA CALENDAR The US presidential election will very likely be a major driver for commodities this week, with the general direction of this market being ultimately determined by who the winner is on Tuesday night. Precious metals markets stand to be the commodity class most impacted by this election contest. If Donald Trump wins, probabilities of a December Fed hike would likely fall and markets would get very nervous about the equity market and the economy, pushing gold into the $1375/oz range. But, we expect this initial large reaction to be short lived though, as markets would soon realize a Trump Presidency is not the end of the world. On the other hand, if Hillary Clinton wins, we would expect gold to sell off as a Fed hike becomes more likely and markets rally. Ultimately, whichever candidate wins, TD expects the low interest rate environment and uncertainty to persist in the foreseeable future, thus keeping demand for precious metals elevated. Base metal and oil market reactions to the election are expected to be less severe and driven mainly by risk sentiment. Initially a Trump victory would likely see a decline in oil and base metals, while a Clinton victory would see the opposite. After the initial election reactions the base metal and oil markets should return to their focus on the Chinese economy and OPEC/NOPEC headlines respectively. In terms of data, we will see trade data, CPI, PPI, money supply, and industrial production numbers from China to provide more insight on the Chinese economy and the ability for base metals to continue their recently rallies. As for oil, focus will continue to be on OPEC/NOPEC headlines, and also the DOE inventory report, especially after the record build of 14m barrels last week. Ryan McKay Release Consensus Prior TUESDAY (November 8th) 11/7 11/18 CNY Foreign Direct Investment YoY CNY (Oc 2.5% 1.2% CNY Crude Oil Imports Volume MT (Oct) 33.6m CNY Refined Petroleum Oil Exports Volume MT (Oct) 4.3m CNY Coal/Lignite Imports Volume MT (Oct) 24.44m CNY Refined Petroleum Oil Imports Volume MT (Oct) 1.93m CNY Fuel Oil Imports Volume MT (Oct).74m CNY Trade Balance (Oct) $51.7bn $41.99bn CNY Exports y/y (Oct) 6.% 1.% CNY Imports y/y (Oct) 1.% 1.9% CNY Trade Balance CNY (Oct) bn bn CNY Exports YoY CNY (Oct).8% 5.6% CNY Imports YoY CNY (Oct) 5.% 2.2% 6: USD NFIB Small Business Optimism (Oct) : USD JOLTS Job Openings (Sep) : USD DOE ShortTerm Crude Outlook (Nov) : USD DOE ShortTerm Mogas Outlook (Nov) : USD DOE ShortTerm Diesel Outlook (Nov) : USD DOE ShortTerm Ht Oil Outlook (Nov) : USD DOE ShortTerm NatGas Outlook (Nov) :3 CNY CPI y/y (Oct) 2.1% 1.9% 2:3 CNY PPI y/y (Oct).9%.1% US Presidential Election WEDNESDAY 5: EUR European Commission Economic Forecasts (Ja 7: USD MBA Mortgage Applications (Nov) 1.2% 1: USD Wholesale Inventories m/m (Sep F).2%.2% 1: USD Wholesale Trade Sales m/m (Sep).5%.7% 1:3 USD DOE U.S. Crude Oil Inventories (Nov) 1k 1442k 1:3 USD DOE Cushing OK Crude Inventory (Nov) k 89k 1:3 USD DOE U.S. Gasoline Inventories (Nov) 25k 227k 1:3 USD DOE U.S. Distillate Inventory (Nov) 2k 1828k 1:3 USD DOE U.S. Refinery Utilization (Nov).4%.4% 1:3 USD DOE Crude Oil Implied Demand (Nov) :3 USD DOE Gasoline Implied Demand (Nov) :3 USD DOE Distillate Implied Demand (Nov) /9 11/1 USD Mortgage Delinquencies (3Q) 4.7% 11/9 11/1 USD MBA Mortgage Foreclosures (3Q) 1.6% 11/9 11/15 CNY Money Supply M y/y (Oct) 6.4% 6.6% 11/9 11/15 CNY Money Supply M1 y/y (Oct) 23.4% 24.7% 11/9 11/15 CNY Aggregate Financing CNY (Oct) 1.bn 172.bn 11/9 11/15 CNY New Yuan Loans CNY (Oct) 676.bn 122.bn 11/9 11/15 CNY Money Supply M2 y/y (Oct) 11.4% 11.5% THURSDAY 8:3 USD Initial Jobless Claims (Nov) 26k 265k 8:3 USD Continuing Claims (Oct) 225k 226k 9:45 USD Bloomberg Consumer Comfort (Nov) :3 USD EIA Natural Gas Storage Change (Nov) :3 USD EIA Working Natural Gas Implied Flow (Nov) : USD Monthly Budget Statement (Oct) $8.bn $136.6bn FRIDAY 1: USD U. of Mich. Sentiment (Nov P) : USD U. of Mich. Current Conditions (Nov P) : USD U. of Mich. Expectations (Nov P) : USD U. of Mich. 1 Yr Inflation (Nov P) 2.4% 1: USD U. of Mich. 51 Yr Inflation (Nov P) 2.4% 13: USD Baker Hughes U.S. Rig Count (Nov) : USD Baker Hughes U.S. Rotary Gas Rigs (Nov) : USD Baker Hughes U.S. Rotary Oil Rigs (Nov) 45 SATURDAY SUNDAY 21: CNY Industrial Production y/y (Oct) 6.2% 6.1% 21: CNY Industrial Production YTD y/y (Oct) 6.1% 6.% 21: CNY Retail Sales y/y (Oct) 1.7% 1.7% 21: CNY Retail Sales YTD y/y (Oct) 1.4% 1.4% 21: CNY Fixed Assets Ex Rural YTD y/y (Oct) 8.2% 8.2% MONDAY (November 14th) 2:3 EUR Bloomberg Nov. Eurozone Economic Survey (Ja 5: EUR Industrial Production SA m/m (Sep) 1.6% 5: EUR Industrial Production WDA y/y (Sep) 1.8% Source: Bloomberg *Eastern Standard Time 6

7 COMMODITY PRICE FORECASTS: Commodity Spot Annual (Avg of forward month contracts) Price Q1 Q2 Q3 Q4F Q1F Q2F Q3F Q4F F 217F 218F Precious Metals Gold 1 $/oz 1,33 1,183 1,26 1,335 1,28 1,285 1,29 1,3 1,3 1,16 1,264 1,294 1,325 Silver 1 $/oz Platinum 1 $/oz 1, ,3 1, ,5 1,75 1,1 1,15 1, ,94 1,225 Palladium 1 $/oz Base Metals Copper 2 $/lb $/tonne 5,31 4,678 4,736 4,778 4,775 4,85 4,875 4,975 5, 5,512 4,742 4,925 5,126 Zinc 2 $/lb $/tonne 2,454 1,68 1,919 2,253 2,3 2,325 2,337 2,425 2,425 1,931 2,38 2,378 2,646 Lead 2 $/lb $/tonne 2,93 1,74 1,718 1,873 2,4 2,72 2,72 2,161 2,161 1,787 1,843 2,116 2,249 Nickel 2 $/lb $/tonne 1,93 8,58 8,827 1,264 1,23 9,37 9,37 9,921 9,921 11,864 9,457 9,645 1,472 Aluminium 2 $/lb $/tonne 1,715 1,515 1,572 1,62 1,69 1,631 1,631 1,676 1,676 1,664 1,599 1,653 1,72 Molybdenum 3 $/lb Iron Ore 4 $/tonne Energy 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 Newcastle Thermal 5 $/tonne #N/A Invalid Se Notes: F = Forecast, E = Estimate, A = Actual; 1. London PM Fix; 2. LM E; 3. M olybdenum equivalent to moly oxide, FOB USA; 4. CFR China, 62% Fe, dry; 5. Japan CIF steam coal markernewcastle MODEL PORTFOLIO TRADE RECOMMENDATIONS ONGOING MODEL TRADES Trade Entry Date Entry Stop Current Target P/L Short Platinum/Palladium ratio 8/Sep/ % CLOSED MODEL TRADES Trade Entry Date Entry Exit Exit Date Target P/L Short Zinc 2/Sep/16 2, , /Oct/16 2, % Long Palladium 3 15/Aug/ /Oct/ % Long Copper 22/Sep/16 4,848. 4, /Oct/16 5, % Long Gold 2 25/Jul/16 1, ,292. 4/Oct/16 1, % Long Nickel 23/Nov/15 8,27. 1,53. 26/Sep/16 12, % Long Palladium 13/Jul/ /Aug/ % Long Copper/Zinc ratio 12/Jun/ /Aug/ % Long ZincShort Aluminum spread 1 1/Nov/ /Jun/ /t Long Copper/Zinc ratio 7/Jun/ /Jun/ % Short Gold/Silver ratio 29/Apr/ /May/ % Long Platinum 4/Feb/ ,38. 18/May/16 1, % Long Gold (shortterm) 1/Feb/16 1, , /Mar/16 1,3. 8.5% Short Gold/Silver Ratio 1 14/Dec/ /Feb/ % Notes: Spread trades P&L calculated on absolute basis; 1. Trade from 216 Commodity Outlook (or 216 Global Strategy Outlook); 2. Levels adjusted in August 25 Commodities Chart Logic 3. Palladium Stop Adjusted Oct 13, 216 to $63 from $647 7

8 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 subsectors (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 8

9 WEEKLY PRICE TABLE Commodity Markets Weekly Update Commodity 8Nov 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)

10 ETF MONITOR TABLE TD Securities: Commodities Trade Strategy Precious Metals ETF Monitor Latest Holdings 5Day Change 3Day Change YearAgo Change Last Updated Date Ounces Value ($US Millions) Ounces Value ($US Millions) Ounces Value ($US Millions) Ounces Value ($US Millions) Total GOLD ETFs 65,36,769 83,723 25, ,546 2,792 16,749,276 3,978 SPDR Gold Trust 11/3/216 3,533,45 39,36 228, , ,468,25 15,24 ETF Securities 11/4/216 9,91,85 12,758 (62,936) 2 (48,383) 239 2,848,442 5,44 ishares 11/4/216 7,426,368 9,56 (1,53) 73 12, ,272,578 3,931 ZKB 1/28/216 4,648,982 5,985 2, , ,789 1,36 Source 11/4/216 3,52,98 4,531 85, , ,927,135 2,791 Sprott Physical 11/4/216 1,771,672 2,281 2, , ,75 99 Central Fund of CA 11/3/216 1,672,644 2, (22,2) 32 Xetra Gold 11/4/216 1,575,65 2, Julius Baer 11/3/216 1,522,982 1,961 (1,7) 13 11,1 6 82, NewGold 11/3/216 1,236,77 1,592 (95) 12 (421) , Central Gold Trust 1/19/216 71, (841) 6 (841) 2 (3,317) 133 Royal Canadian Mint 11/4/216 31, (2) 3 (59) 9 (26,146) 3 Goldist 11/4/216 51, Total SILVER ETFs 67,881,97 12,244 1,41, ,166, ,44,99 3,463 ishares 11/1/ ,242,5 6, , , ,561,4 2,24 Central Fund of CA 11/4/216 75,644,12 1, (1,32,1) 259 ETF Securities 11/4/216 8,5,175 1,461 67, ,921, ,356, ZKB 1/28/216 72,98,488 1, , , ,556, Sprott Physical 11/4/216 54,669, , , ,622, Julius Baer 11/3/216 13,417, , 5 (234,) 5 31, 5 Claymore 11/4/216 3,373, Silver Bullion Trust 11/4/216 2,978, (165,6) 9 Royal Canadian Mint 11/4/216 2,739,676 5 (236) 1 (79) 2 (16,785) 1 Total PLATINUM ETFs 2,231,328 2,23 82, , (276,393) (59) ETF Securities 11/4/ , , , , NewPlat 11/4/ , (35) 14 (8,437) 17 (414,414) (31) ZKB 1/28/ , ,53 6 1, , Swiss & Global 11/3/216 85, , 4 3,28 1 Source 11/4/216 76,7 76 1, ,47 4 (1,259) 5 Sprott Physical 11/4/216 42, (6,268) (2) Deutsche Bank 11/4/216 36,45 36 #VALUE! #VALUE! () 1 (151) 3 Total PALLADIUM ETFs 2,37,64 1,291 16, (45,21) (13) (475,91) (213) ETF Securities 11/4/ , , ,71 (22) (72,862) (2) Standard Bank 11/4/ , (41) 6 (1,11) (25) (142,171) (67) NewPall 11/3/ , (19) 3 (85) (9) (164,943) 2 ZKB 1/28/216 21, (3,16) (1) (7,893) 1 Source 11/4/ , (28,865) (24) (8,647) 1 Swiss & Global 11/3/ ,93 72 (1,37) 1 (5,49) (8) (25,21) () Sprott Physical 11/4/216 96, (3) (14,321) 1 Deutsche Bank 11/4/216 11,179 7 #VALUE! #VALUE! 1 () (46,889) Note: Totals include more than the listed ETFs, hence do not alw ays add up, and the data updates at different, respective ETF issuer 1

11 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, , Respectiv e ETF Issuer 8 Spot Palladium Price (RHS) 1, , Respectiv e ETF Issuer 4 11

12 CHART PACKAGE FORWARD CURVES COMEX Gold COMEX Silver $US/Troy Oz 1,433 1,383 1,333 1,283 1,233 1,183 1,133 1,83 1, $US/Troy Oz $US/lb LME Copper $US/lb LME Aluminum LME Nickel LME Zinc $US/lb $US/lb

13 CHART PACKAGE FORWARD CURVES (CONTINUED) NYMEX WTI Crude Oil ICE Brent Crude Oil $US/bbl 52 $US/bbl (rhs) 19 NYMEX 2:1:1 Crack Spread 3.65 NYMEX Natural Gas 3.45 $US/bbl $US/MMBtu NYMEX Coal 38 NYMEX Uranium $US/Ton 67 $US/Ton

14 CHART PACKAGE VOLATILITY CURVES COMEX Gold COMEX Silver ATM Implied Vol (%) ATM Implied Vol (%) NYMEX Platinum NYMEX Palladium 23 ATM Implied Vol (%) ATM Implied Vol (%)

15 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

16 CHART PACKAGE PETROLEUM & NATURAL GAS INVENTORIES MMbbl Oct3 Nov27 U.S. Crude Oil Inventory Dec25 Jan22 Feb19 Mar18 May13 Jun1 Jul8 Aug5 Sep2 Sep3 Oct28 Nov25 Dec23 Prior 5yr Range Prior 5yr Avg Source: DOE, TD Securities MMbbl Gasoline Inventory Oct3 Nov27 Dec25 Jan22 Feb19 Mar18 May13 Jun1 Jul8 Aug5 Sep2 Sep3 Oct28 Nov25 Dec23 Prior 5yr Range Prior 5yr Avg Source: DOE, TD Securities MMbbl Crude Oil Inventory at Cushing, OK Oct3 Nov27 Dec25 Jan22 Feb19 Mar18 May13 Jun1 Jul8 Aug5 Sep2 Sep3 Oct28 Nov25 Dec23 Prior 5yr Range Prior 5yr Avg Source: DOE, TD Securities MMbbl Heating Oil (ULSD) Inventory Oct3 Nov27 Dec25 Jan22 Feb19 Mar18 May13 Jun1 Jul8 Aug5 Sep2 Sep3 Oct28 Nov25 Dec23 Prior 5yr Range Prior 5yr Avg Source: DOE, TD Securities Operating Capacity Utilization (%) Refinery Utilization 1.% 95.% 9.% 85.% 8.% 75.% Oct3 Nov27 Dec25 Jan22 Feb19 Mar18 May13 Jun1 Jul8 Aug5 Sep2 Sep3 Oct28 Nov25 Dec23 5yr Range 5yr Avg Source: DOE, TD Securities Storage (Bcf) US Natural Gas Storage Level 4,5 4, 3,963 Bcf 3,5 3, 2,5 2, 1,5 1, 5 5yr Range 5yr Avg /Dec 22/Jan 19/Feb 18/Mar 15/Apr 13/May 1/Jun 8/Jul 5/Aug 2/Sep 3/Sep 28/Oct 25/Nov 23/Dec Source: EIA, TD Securities 16

17 CHART PACKAGE COMMITMENTS OF TRADERS 4, COMEX Gold $UD/oz 1,7 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, 2 15 Jan13 Apr13 Jul13 Oct13 Jan14 Apr14 Jul14 Oct14 Jan15 Jul15 Oct15 Jan16 Apr16 Jul16 Oct16 9 Jan13 Apr13 Jul13 Oct13 Jan14 Apr14 Jul14 Oct14 Jan15 Jul15 Oct15 Jan16 Apr16 Jul16 Oct16 1 Gold Spec Position (lhs) Gold Price (rhs) Silver Spec Position (lhs) Silver Price (rhs) Source: CFTC, Bloomberg, TD Securities Source: CFTC, Bloomberg, TD Securities 6, 5, 4, 3, 2, 1, NYMEX Platinum Jan13 Apr13 Jul13 Oct13 Jan14 Apr14 Jul14 Oct14 Jan15 Jul15 Oct15 Jan16 Apr16 Jul16 Oct16 Platinum Spec Position (lhs) $UD/oz 1,8 1,7 1,6 1,5 1,4 1,3 1,2 1,1 1, 9 8 Platinum Price (rhs) Source: CFTC, Bloomberg, TD Securities 35, 3, 25, 2, 15, 1, 5, NYMEX Palladium Jan13 Apr13 Jul13 Oct13 Jan14 Apr14 Jul14 Oct14 Jan15 Jul15 Oct15 Jan16 Apr16 Jul16 Oct16 Palladium Spec Position (lhs) $UD/oz 1, Palladium Price (rhs) Source: CFTC, Bloomberg, TD Securities 2, 1, (1,) (2,) (3,) (4,) (5,) Jan13 COMEX Copper $UD/lb Apr13 Jul13 Oct13 Jan14 Apr14 Jul14 Oct14 Jan15 Jul15 Oct15 Jan16 Apr16 Jul16 Oct16 Copper Spec Position (lhs) Copper Price (rhs) Source: CFTC, Bloomberg, TD Securities 6, 5, 4, 3, 2, 1, (1,) (2,) NYMEX & ICE Natural Gas Jan13 Apr13 Jul13 Oct13 Jan14 Apr14 Jul14 Oct14 Jan15 Jul15 Oct15 Jan16 Apr16 Jul16 Oct16 Natural Gas Spec Position (lhs) $UD/MMbtu Natural Gas Price (rhs) Source: CFTC, Bloomberg, TD Securities 17

18 CHART PACKAGE COMMITMENTS OF TRADERS 6, NYMEX & ICE WTI Crude Oil $UD/bbl 12 25, NYMEX & ICE Brent Crude Oil $UD/bbl 12 5, 4, 3, 2, 1, Jan13 Apr13 Jul13 Oct13 Jan14 Apr14 Jul14 Oct14 Jan15 Jul15 Oct15 Jan16 Apr16 Jul16 Oct , 15, 1, 5, (5,) (1,) (15,) (2,) (25,) Jan13 Apr13 Jul13 Oct13 Jan14 Apr14 Jul14 Oct14 Jan15 Jul15 Oct15 Jan16 Apr16 Jul16 Oct WTI Spec Position (lhs) WTI Price (rhs) Source: CFTC, Bloomberg, TD Securities Brent Spec Position (lhs) Brent Price (rhs) Source: CFTC, Bloomberg, TD Securities 12, NYMEX Gasoline $UD/gal 35 5, NYMEX Heating Oil $UD/gal 1, 3 4, 3, 29 8, 6, 4, 2, Jan13 Apr13 Jul13 Oct13 Jan14 Apr14 Jul14 Oct14 Jan15 Jul15 Oct15 Jan16 Apr16 Jul16 Oct , 1, (1,) (2,) (3,) (4,) (5,) Jan13 Apr13 Jul13 Oct13 Jan14 Apr14 Jul14 Oct14 Jan15 Jul15 Oct15 Jan16 Apr16 Jul16 Oct Gasoline Spec Position (lhs) Gasoline Price (rhs) Source: CFTC, Bloomberg, TD Securities Heating Oil Spec Position (lhs) Heating Oil Price (rhs) Source: CFTC, Bloomberg, TD Securities LME Copper $UD/MT LME Aluminum $UD/MT Aug14 Nov14 Feb15 May15 Aug15 Nov15 Feb16 May16 Aug16 Nov16 Aug14 Nov14 Feb15 May15 Aug15 Nov15 Feb16 May16 Aug16 Nov16 Copper Spec Position (lhs) Copper Price (rhs) Al Spec Position (lhs) Aluminium Price (rhs) 18

19 CHART PACKAGE COMMITMENTS OF TRADERS LME Nickel $UD/MT LME Zinc $UD/MT Aug14 Nov14 Feb15 May15 Aug15 Nov15 Feb16 May16 Aug16 Nov16 Aug14 Nov14 Feb15 May15 Aug15 Nov15 Feb16 May16 Aug16 Nov16 Nickel Spec Position (lhs) Nickel Price (rhs) Zinc Spec Position (lhs) Zinc Price (rhs) LME Lead $UD/MT Aug14 Nov14 Feb15 May15 Aug15 Nov15 Feb16 May16 Aug16 Nov16 Lead Spec Position (lhs) Lead Price (rhs) COMMODITIES RESEARCH TEAM: Bart Melek Head of Global Commodity Strategy bart.melek@tdsecurities.com Mike Dragosits Senior Commodity Strategist mike.dragosits@tdsecurities.com Ryan McKay Commodity Strategist ryan.mckay@tdsecurities.com

20 GLOBAL STRATEGY TEAM Global Strategy Richard Kelly Head of Global Strategy Commodities Strategy Bart Melek Head of Global Commodity Strategy Mike Dragosits Senior Commodity Strategist Ryan McKay Commodity Strategist Global Macro Strategy David Tulk Head of Global Macro Strategy Millan Mulraine Deputy Chief US Macro Strategist Annette Beacher Chief AsiaPacific Macro Strategist Jacqui Douglas Chief European Macro Strategist James Rossiter Senior Global Strategist Brittany Bauman Macro Strategist Robert Both Macro Strategist Global Strategy USA Canada Australia New Zealand UK Europe Emerging Markets FX & Commodities 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 Renuka Fernandez European Rates Strategist 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 TorontoDominion Bank. All rights reserved. 2