Key Commodity Themes Maxwell Gold Director of Investment Strategy Gradient Investments Elite Advisor Forum October 5 th, 2017
2001 2002 2002 2003 2004 2005 2006 2007 2007 2008 2009 2010 2011 2012 2012 2013 2014 2015 2016 2017 Purchasing Managers Index (PMI) Industrial Production (% y ear over y ear) Gross Domestic Product (%) Global growth outlook remains positive GROWTH Global Manufacturing (lhs) EM-DM Spread Emerging Markets (EM) 56 Global Industrial Production (rhs) 6 Developed Markets (DM) 54 5 9.0 7.0 52 4 5.0 50 3 3.0 2 1.0 48 1 (1.0) 46 0 (3.0) (5.0) 44 2013 2014 2015 2016 2017-1 Source: Bloomberg, ETF Securities. Chart data from 02/28/10 to 08/31/17. Source: Bloomberg, ETF Securities. Chart data from 12/31/99 to 06/30/17. 2
Slowing Growth + High Inflation Slowing Growth + Low Inflation Rising Growth + High Inflation Rising Growth + Low Inflation GROWTH Commodities tend to perform well in rising growth REITs Commodites Commodites Global Equities Cash REITs Global Equities Bonds Bonds 0.0% 0.5% 1.0% 1.5% 2.0% Cash 0.0% 0.5% 1.0% 1.5% 2.0% REITs REITs Bonds Bonds Cash Global Equities Commodites Cash Global Equities Commodites -0.5% 0.0% 0.5% 1.0% 1.5% A verage monthly return 0.0% 0.5% 1.0% 1.5% A verage monthly return Source: Bloomberg, ETF Securities. Chart data from 01/30/76 to 02/28/17. Commodities = S&P GSCI TR Index, Global equities = MSCI World TR Index, Bonds= Barclays US Aggregate TR Index, REITs (Real Estate Investment Trusts) = FTSE All Equity REIT Index, Cash = 3 month US Treasury bill. High/low inflation = top/bottom 20% of months in US headline consumer price index (CPI), Slowing/rising growth = US ISM Purchasing Manufacturing Index (PMI). All above charts measuring average monthly return for respective asset class. 3
Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 2011 2012 2013 2014 2015 2016 2017 Jul-17 Aug-17 US 10 Y ear Breakeven Rate (%) US Dollar Index (inverted) Percent (%) Core inflation cools but US Dollar weakens INFLATION 2.10 2.05 2.00 US Inflation Expectations (lhs) US Dollar (inverted, rhs) 0.012 5.0 4.5 4.0 3.5 Final Demand PPI Headline CPI Core CPI Core PCE Headline PCE 1.95 3.0 1.90 1.85 0.011 2.5 2.0 1.5 1.80 1.0 1.75 1.70 1.65 0.5 - (0.5) (1.0) 1.60 0.010 (1.5) (2.0) Source: Bloomberg, ETF Securities. Chart data from 12/31/99 to 09/12/17. Source: Bloomberg, ETF Securities. Chart data from 12/31/99 to 07/31/17. 4
Commodities rank among top inflation hedges INFLATION Natural gas Palladium Gathering & Processing Energy Platinum Natural gas pipelines US Midstream infra US Energy infra US E&P infra Oil & Gas stocks Crude oil pipelines Soft commodities Silver Crude oil Soybeans All commodities N. American RE Stocks Health Care Utilities US Downstream infra Real Estate (RE) Commodities Infrastructure (infra) Natural resources and other stocks 0% 10% 20% 30% 40% 50% 60% Return Source: Bloomberg, ETF Securities. Chart data from 01/02/91 to 02/28/17. E&P = exploration and production. 5
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Index level Percent (%) Commodities tend to track inflation surprises INFLATION 300 Bloomberg Commodity Index (lhs) Unexpected Inflation, 3-month average (rhs) 4 250 3 2 200 1 150 0-1 100-2 50-3 -4 0-5 Source: Bloomberg, US Federal Reserve. ETF Securities. Chart data from 03/31/92to 02/28/17. 6
Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 US$ (millions) US$ (millions) Flows move back into Emerging Markets (EM) EM 185,000 Emerging Market Equity - Net New Flows (rhs) Cumulative Flows (lhs) 8,000 183,000 181,000 6,000 179,000 4,000 177,000 2,000 175,000 173,000-171,000 (2,000) 169,000 167,000 (4,000) 165,000 (6,000) Source: Bloomberg, ETF Securities. Chart data from 1/1/15 to 7/31/17. 7
Commodities yet to capture EM growth rally EM 1200 1100 1000 MSCI Emerging Market Index (lhs) Bloomberg Commodity Index (rhs) 110 105 100 95 Index Level 900 800 90 85 80 700 75 600 70 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Index Level Source: Bloomberg, ETF Securities. Chart data from 1/1/15 to 09/08/17. 8
Wheat Cotton Corn Palladium Soybeans WTI Oil Natural Gas Iron Ore Nickel Platinum Brent Oil Aluminium Silver Copper Zinc % deviation from price Supply side destruction expected to continue SUPPLY Commodities Marginal Cost of Production 90% 70% 50% 30% 10% -10% -30% % price is above/below at 90th percentile marginal cost -50% Source: Bloomberg, Morgan Stanley, IEA, USDA, ETF Securites. Data as of 09/08/17. 9
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 Price to Earnings (P/E) Ratio 10 Year Sovereign Debt Yield Valuations across asset classes still stretched MACRO 30 25 Current P/E Ratio 10 Year Avg P/E Ratio 14 12 US UK Germany Japan 10 20 8 15 6 10 4 2 5 0 0 United States Europe Japan Emerging Markets -2 Source: Bloomberg, ETF Securities. Chart data from 12/31/06 to 08/31/17 Source: Bloomberg, ETF Securities. Chart data from 12/31/06 to 09/08/17 10
MACRO VIX & valuations have strong inverse correlation VIX Index level 45 40 35 30 Jan 2015 - June 2017 25 20 15 Current 10 R² = 0.6107 5 16 17 18 19 20 21 22 23 Price to Earnings Ratio Source: Bloomberg, ETF Securities. Data from 01/01/15 to 06/30/17. 11
Index rebased to 1 00 in May 2006 Balance sheet normalization poses risks MACRO 900 800 700 600 Central bank balance sheet levels Swiss National Bank (SNB) US Federal Reserve (Fed) European Central Bank (ECB) Bank of England (BOE) Proposed Fed Normalization Path 500 400 300 200 100 0 2007 2009 2011 2013 2015 2017 2019 Source: Bloomberg, ETF Securities. Data from 05/31/06 to 08/31/17. 12
Index Level VIX does not reflect true market risks MACRO 39 34 VIX Index ETF Securities VIX Model 29 24 19 14 9 2012 2013 2014 2015 2016 2017 Source: Bloomberg, ETF Securities. Data from 01/01/12 to 09/08/17. 13
Frequency (# of weeks) MACRO Short term volatility benefited gold and platinum 30 25 20 Gold Silver Platinum 23 20 21 24 25 15 15 12 10 9 5 6 4 4 6 5 0 1 1 1-20% -15% -10% -5% 0% 5% 10% 15% 20% Source: Bloomberg, ETF Securities. Data from 03/30/90 to 009/08/17. Weekly Return during 2 Standard Deviation move in VIX Index 14
Gold performed well in persistent drawdowns MACRO Total Return Gold Silver Platinum S&P 500 Date range 2008 Financial Crisis 10.5% -5.0% -28.2% -47.1% 8/28/08-03/09/09 Black Monday 8.4% -11.8% -14.5% -33.5% 8/25/87-12/04/87* 2002 Recession 6.8% 7.0% 0.3% -31.5% 3/19/02-07/23/02 Dot-com Bubble I -5.8% -10.5% 1.3% -22.7% 9/29/00-04/04/01 Gulf War 6.8% -10.8% -6.4% -19.2% 7/16/90-10/11/90 Long Term Capital Mgmt -6.4% -12.7% -10.1% -19.2% 7/17/98-08/31/98 US Credit Downgrade 8.2% -16.6% -13.5% -18.4% 7/07/11-10/03/11 Subprime Meltdown 31.8% 45.8% 48.0% -17.9% 10/09/07-03/10/08 Dot com Bubble II 6.8% 9.4% 5.9% -18.4% 8/24/01-09/21/01 Flash Crash 4.7% -2.6% -13.8% -15.6% 4/23/10-07/02/10 Average Return 7.2% -0.8% -3.1% -24.4% Source: Bloomberg, ETF Securities. Data: 8/25/87 to 10/3/11. * S&P 500 price return. 15
Important Information The statements and opinions expressed are those of the author and are as of the date of this report. All information is historical and not indicative of future results and subject to change. Reader should not assume that an investment in any securities and/or precious metals mentioned was or would be profitable in the future. This information is not a recommendation to buy or sell. Past performance does not guarantee future results. The ETFS Silver Trust, ETFS Gold Trust, ETFS Platinum Trust, ETFS Palladium Trust and ETFS Precious Metals Basket Trust are not investment companies registered under the Investment Company Act of 1940 or commodity pools for purposes of the Commodity Exchange Act. Shares of the Trusts are not subject to the same regulatory requirements as mutual funds. These investments are not suitable for all investors. Trusts focusing on a single commodity generally experience greater volatility. Commodities generally are volatile and are not suitable for all investors. Trusts focusing on a single commodity generally experience greater volatility. Please refer to the prospectus for complete information regarding all risks associated with the Trusts. Shares in the Trusts are not FDIC insured and may lose value and have no bank guarantee. The value of the Shares relates directly to the value of the precious metal held by the Trust and fluctuations in the price could materially adversely affect investment in the Shares. Several factors may affect the price of precious metals, including: A change in economic conditions, such as a recession, can adversely affect the price of the precious metal held by the Trust. Some metals are used in a wide range of industrial applications, and an economic downturn could have a negative impact on its demand and, consequently, its price and the price of the Shares; Investors' expectations with respect to the rate of inflation; Currency exchange rates; Interest rates; Investment and trading activities of hedge funds and commodity funds; and Global or regional political, economic or financial events and situations. Should there be an increase in the level of hedge activity of the precious metal held by the Trust or producing companies, it could cause a decline in world precious metal prices, adversely affecting the price of the Shares. Also, should the speculative community take a negative view towards the precious metal held by the Trusts, it could cause a decline in prices, negatively impacting the price of the Shares. There is a risk that part or all of the Trusts physical precious metal could be lost, damaged or stolen. Failure by the Custodian or Sub-Custodian to exercise due care in the safekeeping of the precious metal held by the Trusts could result in a loss to the Trusts. 16
Important Information The Trusts will not insure its precious metals and shareholders cannot be assured that the custodian will maintain adequate insurance or any insurance with respect to the precious metals held by the custodian on behalf of the Trust. Consequently, a loss may be suffered with respect to the Trust s precious metal that is not covered by insurance. Commodities generally are volatile and are not suitable for all investors. Investors buy and sell shares on a secondary market (i.e., not directly from Trusts). Only market makers or authorized participants may trade directly with the Trusts, typically in blocks of 50k to 100k shares. Diversification does not eliminate the risk of experiencing investment losses. This material must be accompanied or preceded by the prospectus. Carefully consider each Trust s investment objectives, risk factors, and fees and expenses before investing. Please view the prospectus at http://etfsecurities.com/etfsdocs/usprospectus.aspx ALPS Distributors, Inc. is the marketing agent for ETFS Silver Trust, ETFS Gold Trust, ETFS Platinum Trust, ETFS Palladium Trust and the ETFS Precious Metals Basket Trust. Maxwell Gold is a registered representatives of ALPS Distributors, Inc. ETF 001213 09/30/18 17