December 2016
1.00
Energy
0.23
Industrial
Metals
0.38
Agriculture
the curve and inflation will rise faster than the central bank will
raise rates, keeping real rates very low. According to the Feds latest
dot-plot of its committee members assessment of appropriate
policy settings, the Fed is only likely to raise rates twice in 2017.
Low real rates are gold price positive. We believe that golds fair
value is between the $1400-1450/ounce range.
Silver has a close correlation with gold and hence we expect silver
prices to rise. In contrast to gold, which trades like a currency, the
physical supply and demand for silver also drives the silver price.
Factoring in the decline in mining investment and rising industrial
activity, we estimate silvers fair value in the $22-24/ounce range.
Speculative positioning in gold and silver has retreated from highs
reached in July, but they remain elevated as investors seek a hedge
against geopolitical risk. The Italian constitutional referendum, the
French Presidential election and the German parliamentary
elections are some of the items on the calendar for the coming year.
When and if the United Kingdom (UK) will start the process of
leaving the European Union (EU) has still not been resolved. Rising
populism poses a threat to stability and investors will look to hedge
this risk.
0.29
1.00
0.34
0.24
Gold
Industrial
Metals
0.38
0.34
1.00
0.37
Silver
Agriculture
0.29
0.24
0.37
1.00
z-score
2
1
0
-1
-2
-3
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
Forecast
130
1.5
125
1.0
120
2.0
weeks. Since not a lot has changed for the metals from a
fundamental perspective, we fear that part of the gains reflects a
speculative frenzy originating from China that could correct in the
short-term.
0.5
0.0
-0.5
-1.0
-1.5
1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17
115
110
Aluminum
Copper
Zinc
Nickel
Lead
Tin
105
100
95
90
Sep 16
Oct 16
Nov 16
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 Precious Metals Basket Trust are not
investment companies registered under the Investment Company Act of 1940 or a commodity pool 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. Should there be an increase in the level of hedge activity of the precious metal held by the Trusts 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.
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
Trusts precious metal that is not covered by insurance.
Commodities generally are volatile and are not suitable for all investors.
Please refer to the prospectus for complete information regarding all risks associated with the Trust.
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.
Definitions: The Federal Reserve (Fed) is the central banking system of the United States of America. The European Union (EU) is a politico-economic union
of 28 member states that are located primarily in Europe. The Organization of Petroleum Exporting Countries (OPEC) is a group consisting of 12 of the
world's major oil-exporting nations. La Nina is the cooling of the water in the equatorial Pacific that occurs at irregular intervals and is associated with
widespread changes in weather patterns. Correlation is a mutual relationship or connection between two or more variables. A z-score (aka, a standard score)
indicates how many standard deviations an element is from the mean.
Commodities generally are volatile and are not suitable for all investors. This material must be accompanied or preceded by
the prospectus. Carefully consider each Trusts investment objectives, risk factors, and fees and expenses before investing.
Please click here to view the prospectus.
ALPS Distributors, Inc. is the marketing agent for ETFS Silver Trust, ETFS Gold Trust, ETFS Platinum Trust, ETFS Palladium
Trust and ETFS Precious Metals Basket Trust.
Maxwell Gold is a registered representative of ALPS Distributors, Inc.
ETF001069 12/31/17