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Precious MetalsMonthly report

Standard Bank PlcCannon Bridge House25 Dowgate Hill, London EC4R 2SB

2nd May 2008

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

Gold April proved to be “a month of two halves”, with prices rising in the first two

weeks and then resuming their downward path, so that at the start of May the

markets are a little confused. The economic background remains a cause for concern

and while there has been some asset rotation away from gold (and commodities as a

whole) towards the end of April, this does not mean that the bull run has drawn to a

close. A case can be made for renewed investment once conditions have settled down

and this latest bout of dollar strength has worked its way through (which may be a

matter of weeks).

At the start of April gold had corrected from over $1,000 towards $900 and

physical buyers were returning to the market, although it was not at that stage clear

how sustainable their interest would be. In the event the buying proved to be patchy.

In the first half of the month prices rallied towards $960 as investors re-established

their interest in the market, but sentiment changed again in the middle of the

month and gold slid under bouts of liquidation. April’s final fixing was $871.00. A

significant development was the sales from the major Exchange Traded Funds late in

the month, as investors shifted their portfolio balance in favour of Treasuries. This

is the first time such large-scale reductions have been seen in these Funds (see page

two).

The professional market has reduced its positioning in gold for a combination of

reasons: a) a perception that the bull run had been over-extended and was not supported

by the underlying fundamental position; b) suggestions that the US might have passed

the worst of its credit market problems; and c) part of a move away from commodities,

in an effort to mitigate risk. The storm is not over, however, and renewed positioning

is likely over the next few weeks.

•

•

•

Gold 1

Silver 6

Platinum Group Metals 9



Precious Metals

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J an-07 Apr-07 J ul-07 Oct-07 J an-08 Apr-08

C ontracts000s

550

650

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1050

US $/oz

Non-C ommercial Non-R eportableS ettlement P rice

Spot gold in dollar terms against $; euro rate

Although over the whole month gold’s losses were equal in

both dollar and euro terms (2%), the range traded during

April was narrower in euro terms than in dollar’s, reflecting

the dollar’s pivotal role as investors assess levels of market

risk. The dollar enjoyed some strength towards the end

of April and this may persist through May before another

downturn, suggesting that gold may have some more

downward pressure before recovering.

Non-commercial and Non-reportable Net Positions

The combined speculative positions on COMEX stood at 601

tonnes at the start of April (down from 786 tonnes in mid-

February). There was a mild gain through the first half of

the month to 638 tonnes, almost exclusively from long-side

increases, before renewed sales took it to 621 tonnes on the

22nd. The end-month figures are not yet available, but are

expected to be substantially lower.

COMEX futures volume and open interest ETF Holdings

Volumes on COMEX in April were, at 386 tonnes per day,

down by 28% on the average for the first quarter of the

year, but 74% ahead of volumes last April. Taking open

interest and the net speculative positions into account

suggests that industrial users of the Exchange increased

their positions on the Exchange over the month by more

than the speculators, with marginally more short side

positions put on than long positions.

Holdings in the ETFs were steady at a little over 930 tonnes

until 21st April, when they started a sharp decline, dropping

to 877 tonnes at the end of the month, a fall of 59 tonnes

or 6% on the end-March level. The StreetTRACKS fund

in New York shed almost 10% as investors looked to the

treasury market.

Dollar:E uro & G old P rice

550

650

750

850

950

1050


US $/oz

1.20

1.30

1.40

1.50

1.60

US $/€

P M F ix $ US $/€

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350


C ontracts000s

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C ontracts000s

V olume Open Interes t (rhs )

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1000

J an-03 J an-04 J an-05 J an-06 J an-07 J an-08

T onnes

300

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500

600

700

800

900

1,000

1,100US $/oz

G B S LS E streetT R AC K S iS hares

Other G old P M F ix



Precious Metals

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650

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1050


G oldP rice

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XAUIndex

Au $ pm fix XAU

550

650

750

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950

1050


G oldP rice

1200

1300

1400

1500

1600

S &P500

Au $ pm fix S &P 500

Gold and the S&P 500

Again, a month of two halves. The S&P 500 outperformed

gold by 3% over the month as investors have been looking

for value in the belief that the worst has passed for equities,

despite uninspiring corporate results. The moves have been

cautious, though, and all the volatility came from gold. The

end-April rate cut had been priced into the equities market

and it looks now as if both sectors need to tread water a little

in the face of conflicting economic numbers, although the

equities may be marginally preferable in the near term.

Spot gold vs gold equities

Lease rates worked gradually higher in the first half of

the month, suggesting that there was some selling into

strengthening prices, but liquidity remained high with

the twelve-month rate reaching a high of just 0.6%. The

yield curve has flattened since with the three months rate

picking up, suggesting that there may be some more trade

selling coming into the market, and quite possibly some

opportunistic shorts.

The average pm fix for the month of $909.70 was 34% higher

than that of April 2007, but currency moves mean that in

euro terms the gain was just 15% and in Swiss francs, 12%.

The producers have fared slightly better, with the price in

Australian dollars gaining 19%, in Canadian dollars, 20% and

in South African rand, 48%. The scope, however, for fresh

gains in major currencies depends on the return of the investor.

In the bull phase during the first half of April mining stocks

gained 11% against gold’s 7% and have since given back all

the gains to end the month flat, while gold has lost ground.

The implication is that the markets are feeling that gold has

staged most of its likely correction, but that a bounce is not

imminent.

Leasing Rates (%)

3-mth 12-mth

Average

2007 0.21% 0.26%

Jan-Apr 08 0.25% 0.42%

Apr 08 0.22% 0.46%

High

2007 0.19% 0.20%

Jan-Apr 08 0.48% 0.63%

Apr-08 0.37% 0.63%

Low

2007 0.04% 0.03%

Jan-Apr 08 0.03% 0.22%

Apr-08 0.03% 0.37%

Apr % Ch.

US$/oz 2007 Jan-Apr 08 Apr 08 mom yoy

Average 695.91 921.43 910.65 -6% 38%

High 841.75 1,023.50 951.50 N/a N/a

Low 608.30 840.75 867.75 N/a N/a

Prices (based on a.m. and p.m. fix)



Precious Metals

550

650

750

850

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1050


G oldP rice

3.5

8.5

13.5

18.5

23.5

28.5

33.5

38.5

V IXIndex

P M F ix $ V IX

550

650

750

850

950

1050


G oldP rice

3.5

4.0

4.5

5.0

5.5

6.0

B ondY ield

Au $ pm fix 30-yr B ond yield

Gold vs the Long Bond Yield Gold and the VIX Index

The long bond yield rose from 4.3% to 4.5% during

April, as the markets anticipate continued increases in the

inflation rate. With short-term rates below zero, gold has

the potential to benefit from this sentiment, but this is a

medium term view. For the short term, the markets are

attempting to determine whether there are more rate cuts in

the pipeline from the Federal Reserve; the latest statement

has hinted that there are no plans for any further reductions,

but the markets are still uncertain.

The VIX Index has been relatively stable, oscillating between

19 and 24. This is roughly 30% below the 25-32 range

sustained in March, while gold’s range in April has been

6% lower than in the previous month. The drop in the VIX

reflects in part the fact that the S&P traded in a remarkably

narrow range during April. Recent economic figures (better

GDP than expected, but slow consumer spending and poor

consumer confidence) suggest that the VIX is likely to

remain high and that gold will again benefit from a return of

the investor, but some time is needed yet for the markets to

assess the degree of risk that still lies in the system.

Persistent strength in oil, with WTI testing $120 in late

April (an increase of 73% against the price at the end of

April 2007) and continued strength in commodities (the

GSCI has risen by 52% over the past twelve months) point

to continued inflationary pressures. This, combined with an

uncertain equity market outlook, should all contribute to

renewed interest in gold. The physical market has started to

pick up again at the start of May and should help to lay the

foundations for a renewed increase in prices as the markets

look for further dollar weakness in the middle of the year.

Key IndicatorsKey Indicators

Apr % Change

(end-period) 2007 Apr-08 mom yoy

S&P 500 1,468 1,386 5% -7%

CRB Index 427 470 1% 18%

XAU Index 173 171 -3% 25%

US 30-yr Bond Yield 4.50 4.47 N/a N/a

Gold Price ($/oz) 836.50 871.00 -7% 29%

Key Indicators

Gold

April 30th 2008

Darran Grabham* +27-11-378-7228 [email protected]

Gold The break below $880 does not bode well for gold, and the near-term bear trend is expected to continue. A band of resistance now extends from $880 to $906.30, and a bearish view is currently expressed. A test on the $854 to $845.40 area is envisaged, with the possibility of a secondary recovery then coming to the fore before renewed weakness produces a move to $820. Trade from the short side and, although the weaker trend may extend towards $780, exiting positions on approach of $820 is advised.

Provided the $773.50 corrective low of November 2007 is not broken, the general outlook remains positive — having said this, we are not currently forecasting a move to a new high. Gold is forecast to establish a significant support base between $820 and $780, providing the platform for a gradual recovery in the months ahead. An unexpected decline through $773.50, will ini-tially yield a move to the $730 to $720 area. On the topside, regaining near-term trendline resistance — currently situated at $920 — would be expected to yield a move towards the $952.60 to $954.50 resistance zone, with the rally then petering out.

Source: Reuters

Source: Reuters

USD/XAU (Daily)

17Dec07 31Dec 14Jan 28Jan 11Feb 25Feb 10Mar 24Mar 07Apr 21Apr 05May

PrUSD

800

850

900

950

849.50

1,030.80

USD/XAU (Weekly)

Jul06 Sep Nov Jan07 Mar May Jul Sep Nov Jan08 Mar May

PrUSD

500

600

700

800

900

773.50

642

52-week moving average = $788.25



Silver

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240


Index

G old S ilver C opper

Dollar:E uro & S ilver P rice

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1300

1500

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1900

2100


cents /oz

1.20

1.28

1.36

1.44

1.52

1.60US $/€

London F ix US $/€

0.000

20.000

40.000

60.000

80.000

100.000


C ontracts000s

8

10

12

14

16

18

20

US $/oz

Non-C ommercial Non-R eportableS ettlement P rice

Once again silver tended to follow in gold’s footsteps, trading

up from an opening low in April of $16.30 to reach almost $18.80

(on an intra-day basis) in the middle of the month and then

retreating amid a widespread sell-off in the commodities sector,

to end April virtually at the level at which it opened the month.

Silver thus traded in a range of almost 12% during April, while

gold’s range was 10%.

The physical market for silver as an “investment” has mirrored

that of gold, with jewellery and small bar purchasers dipping in

and out of the market, but not buying in much volume. At the

start of May there are again signs of some interest, but investor

sentiment remains cautious.

While the market was dominated by speculative activity,

during April, the end of the month and the start of May has seen

some buying interest in the market at and below $16.50, with

suggestions of some industrial purchasing. The market is wary

of resistance at $17 and, with gold looking cautious for the near

term, silver may struggle to make any sustainable gains during

the coming weeks, as investors and speculators are currently

more interested in the treasury and, to a lesser extent, the equity

markets. It is, therefore, likely to be the underperformer over

the next few weeks.

•

•

•

Comex: Silver Non-Commercial and Non-Reportable Positions

Spot Silver Price; Dollar:Euro Rate Silver, gold and copper; Jan 2007=100

The strength in the sector in the first half of April saw silver

gain 9% in euro terms before dropping by 10% in the latter

period. The net fall over the month was marginally smaller

than it was in dollar terms, reflecting the buying that came

into the market towards the end of the month, and which

may yet provide support in an uncertain market.

Silver’s correlation with gold over April was 79%, compared

with 87% for the past twelve months. The correlation

coefficient with copper was much lower, at 34% compared

with 16% over the past year. This is not surprising; with the

markets currently uncertain about the economic outlook, due

to conflicting US figures, silver is likely to adhere more to gold

than to copper in the coming weeks.

Speculators’ net long position on COMEX fluctuated in a narrow

band over the month, reflecting comparatively low speculative

trading interest during the month. After dropping by almost

2,000 tonnes in late March, the position dipped to 8,962 tonnes

on 8th April before rising to 9,281 tonnes on the 22nd, with

the majority of the activity coming from long-side traders. The

subsequent price fall suggests a further contraction in the position

in the following week.

•



Silver

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Apr-06 Nov-06 J un-07 J an-08

MillionOunces

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iS hares S ilver T rus t E T F S ecurities

ZK B London F ix

G old : S ilver R atio(London gold p.m. fix US $/oz over London s ilver

fix US $/oz)

40

45

50

55

60


The Gold : Silver Ratio

ETF Holdings

The April average of $17.50 was 27% higher than the

average in April 2007, but currency movements mean that in

euros their increase was only 9%. In Australian and Canadian

dollars the increase was 13% and 14% respectively, but

there would appear to be little sign of any forward selling,

with lease rates holding steady and liquidity plentiful.

With gold not yet looking to move higher the silver market is

cautious of resistance that stands at $17.

While gold has been experiencing a sell-off in some of

the major Exchange Traded Funds, silver holdings have

increased. The iShares fund in New York added 123 tonnes

during April to 5,777 tonnes, while the holdings in the ETC

in London added seven tonnes, taking the combine holdings

of the two funds to 6,114 tonnes. Changes in holdings are

now taking place only intermittently.

The gold: silver ratio dipped briefly below 50 when the

metals reached their high in mid-April, but has now widened

to nearly 53, as silver has underperformed gold during the

subsequent correction. The ratio is likely to widen further

as silver is, in the current environment, likely to continue to

underperform gold. The ratio averaged 52.7over the month,

while over the year to the end of April it was 53.2.

Turnover on COMEX was 25% higher than in April 2007,

while open interest dropped by 13% over the month.

Combining the COMEX figures with those from the

Commitment of Traders suggests that the “trade” was active

on the Exchange, with fresh short-side hedging appearing

in greater volume than long-side interests. This tends to

confirm anecdotal evidence that the buying at the end of

the month was largely in the Over-the-Counter market.

Open interest is at its lowest since late October 2007, again

reflecting uncertainty among speculative traders.

Apr % Ch.


Average 13.38 17.57 17.50 -10% 27%

High 15.82 20.92 18.56 N/a N/a

Low 11.67 14.93 16.47 N/a N/a

Prices (based on London fix)

Turnover Open Interest Price (US$/oz)

2007 27,013 120,884 13.38

Feb-08 49,480 182,057 17.66

Mar 44,089 157,973 19.16

Apr 41,498 143,333 17.48

Source: COMEX

Comex Turnover and Open Interest(Number of Contracts, 5,000 oz, daily averages)

Silver

April 30th 2008


Silver The near-term bear trend is approaching short-term trendline support, and also the $16.32 to $16.19 support zone. This repre-sents a pivotal area, and we continue to advise utilising the current weakness as an opportunity to enter into long posi-tions.

The trendline drawn off the $21.24 high — and linking the $18.74 corrective high — provides resistance at $17.75, and this represents the first important barrier for silver. A return beyond the line is required to alleviate the bearish threat, turning the outlook mildly positive. The next significant resistance zone is represented by $18.74 to $19.19, but we doubt silver’s ability to regain this area in the coming month, paving the way for a period of consolidation.

The outlook will become bearish through $16.19, with the minimum target area highlighted at $15.50 to $15.25. A retracement may occur once this target has been fulfilled, but thereafter there will be scope for the weaker trend to extend towards $14.50.

Source: Reuters

Source: Reuters

USD/XAG (Weekly)

Feb07 Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan08 Feb Mar Apr May

PrUSDOzs

12

14

16

18

11.03

13.58

21.24

16.19

Short-term support is situated just above $16

USD/XAG (Monthly)

Jul01 Jan02 Jul Jan03 Jul Jan04 Jul Jan05 Jul Jan06 Jul Jan07 Jul Jan08 Jul

PrUSDOzs

4

6

8

10

12

14

16



Platinum Group Metals

1,000

1,200

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1,600

1,800

2,000

2,200

2,400


P latinum

550

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950

1050

G old

P latinum G old

Platinum & Gold Prices

Platinum traded sideways during April, as prices

steadied against a backdrop of fresh announcements

concerning downgrades to mine supply in 2008.

Palladium price movements closely tracked those of

platinum during April, trading within a narrow range of

just $52, compared with in excess of $160 over the past

two months.

Rhodium’s comparatively tighter fundamentals helped

to provide support to the metal’s price at levels above

$9,000 during the latter half of the month.

Platinum & Palladium

During April, platinum registered a marginal decline in

the month-on-month average yet, quite importantly, the

unprecedented gains over recent months were largely

retained as prices firmed, consolidating just under the

$2,000 level. Perhaps equally impressive was the metal’s

continued outperformance of gold, as the former continued

to benefit from increased investor interest and ongoing

supply concerns. From an opening of $1,938 the price

traded broadly sideways and in fact lost 0.5% on an intra-

month basis, after trading within a narrow range of 7.4%

(compared with over 20% in both February and March).

Despite this lack of upward momentum, gains realised during

the first quarter meant that the monthly average in April was

still up a remarkable 56% year-on-year.

•

•

•

On a day to day basis, platinum moved broadly in line

with gold, yet experienced comparatively less risk to the

downside, as platinum’s fundamentals remained solidly

underpinned by renewed supply concerns related to the

unresolved South African power supply issues. Firstly,

Impala Platinum announced early in the month that it still

had not returned to full production, after Eskom failed to

deliver on the proposed power phase-in that would return

up to 95% capacity to a majority of the country’s mines.

Secondly, the outlook on production further deteriorated

after Lonmin announced a substantial downgrade of some

10% to this year’s sales target. Thirdly, there was news that

Anglo Platinum’s first quarter refined production recorded

a steep drop of 24% to 428,000 ounces, as well as news

that Norilsk Nickel’s combined production of platinum and

palladium declined by as much as one-fifth during the same

period.

Platinum and Palladium Prices

Apr % Ch.


Average 1,305 1,899 1,989 -3% 56%

High 1,544 2,276 2,065 N/a N/a

Low 1,112 1,522 1,918 N/a N/a

Platinum Prices (based on a.m. and p.m fix)

P latinum & P alladium P rices

1,000

1,200

1,400

1,600

1,800

2,000

2,200

2,400


US $/oz

300

340

380

420

460

500

540

580

620

US $/oz

P latinum P alladium (rhs )




P d E T F

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

Apr-07 J ul-07 Oct-07 J an-08 Apr-08

Ounces

E T F S ecurities ZK B

P t E T F

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

Apr-07 J ul-07 Oct-07 J an-08 Apr-08

Ounces

E T F S ecurities ZK B

P latinum Leas ing R ates

-1

0

1

2

3

4

5

6

7

8

J an-07 May-07 S ep-07 J an-08

%

1-month rate

Dollar:E uro & P latinum P rice

800

1,000

1,200

1,400

1,600

1,800

2,000

2,200

2,400

J an-06 J ul-06 J an-07 J ul-07 J an-08

US $/oz

1.16

1.24

1.32

1.40

1.48

1.56

1.64

US $/€

P latinum US $/€

Platinum and the US Dollar: Euro

Pd - ETF Allocations (All Funds)

Certainly there are expectations that demand side effects

will start to mitigate some of the supply side impacts on

price. Already data points to jewellery demand in the first

quarter having fallen sharply as would be expected given

the price performance. As far as motor vehicle sales are

concerned, the US market is already showing signs of

weakness, and it remains to be seen if growth in markets

like China will be sufficient to offset declines elsewhere.

In addition, the development of a silver-based diesel

catalyst could also adversely affect PGM demand, although

current estimates suggest that its impact would, at best, be

marginal.

It also appears as if gold’s relatively lacklustre performance

constrained further moves on the upside in platinum,

as expectations for the FOMC to pause prevailed over a

majority of the month, with the yellow metal coming under

considerable pressure. Yet, as the Federal Reserve lowered

short-term rates on the 30th to 2%, the outlook for the

dollar continued to deteriorate, with any future weakness,

particularly beyond $1.60, standing to re-ignite investor

interest in platinum and the precious metals complex in

the coming months. Also providing further upside support

to the market were several inflationary-related broader

economic events, specifically, oil’s record run to a near

$120/bbl and the breakneck advance in certain food prices.

Sustained investor interest was seen through the healthy

growth in holdings of platinum in the metal’s two ETFs,

which gained 6% from end-March. However, the net long

in platinum Nymex futures, albeit rising steadily from the

end-March figure, remained well below the levels reached in

Platinum 1-month Lease Rate

Pt - ETF Allocations (All Funds)




0

100

200

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J an-07 Apr-07 J ul-07 Oct-07 J an-08

'000ounces

1000

1200

1400

1600

1800

2000

2200

2400

US $/oz

Non-C ommercial Non-R eportableP latinum price

a liquidation which drove prices down by over $170 from

the March peak to the low for April.

In the futures markets, the Nymex net long also failed to

achieve noteworthy gains, with the April weekly average

(up until 22nd April) down 15% or 191,000 ounces on the

average set over the first quarter. In looking at palladium’s

two ETFs, the growth in total holdings, at a little under

12,000 ounces, was more restrained than during the first

quarter. Accounting for all of the growth was the rise in

holdings of the ZKB vehicle, which grew over 28,000 ounces

and helped to offset the decline of 7% seen within the ETF

Securities product.

Fundamentals

On 24th April, GFMS published its Standard Bank sponsored

annual Platinum & Palladium Survey. The main conclusions

of the report were that the platinum market slipped back

into a deficit on a gross basis of 203,000 ounces in 2007.

This figure grew notably when accounting for the estimated

movement in stocks, which were namely the addition to

platinum’s exchange trade funds, and resulted in a deficit of

397,000 ounces at the residual level.

According to the Survey, the fundamentals for platinum

improved markedly over the year due to a dramatic

tightening of the market’s supply/demand balance. To note,

global fabrication rose impressively to a record high of 7.68

million ounces, chiefly lifted by gains in autocatalyst demand

and greater use in other applications. The year-on-year

NYMEX: Platinum Net Positions NYMEX: Palladium Net Positions

previous months, failing to break through 10,000 contracts,

with the 22nd April net long of 9,874 contracts down by

25% on the end-2007 level.

Palladium prices were largely rangebound over the month

and traded very much in line with platinum, with the

monthly average down 9% on March. The price settled

just below $450, a level roughly 25% down on April’s peak,

having fallen due to a dissipation of much of the speculative

froth that had built up over the first quarter. Although

platinum and palladium have very similar fundamental

supply and demand characteristics, the latter metal

continues to under perform due to its lower vulnerability to

disruptions in South Africa (the country’s palladium output

“only” accounts for around one third of global supply,

including autocatalyst scrap, compared with close 70% in

platinum), as well as the weight of very substantial above-

ground stocks. As such, after the dramatic and speculative

run up last month, market participants quickly turned to

view such price levels as wholly unjustified, as evidenced by

Apr % Ch.


Average 355 443 447 -9% 21%

High 382 588 469 N/a N/a

Low 320 363 417 N/a N/a

Palladium Prices (based on a.m. and p.m fix)

0

200

400

600

800

1,000

1,200

1,400

1,600

J an-07 Apr-07 J ul-07 Oct-07 J an-08

'000ounces

200

250

300

350

400

450

500

550

600

US $/oz

Non-C ommercial Non-R eportableP alladium P rice



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IMPORTANT INFORMATION

Precious Metals

R hodium P rices

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

J an-06 J ul-06 J an-07 J ul-07 J an-08

US $/oz

Avg Low High

growth, however, in global demand was marginal, growing by a

little under 40,000 ounces and was predominately constrained

by the steep declines in jewellery.

Regarding supply, GFMS noted that mine production was

driven appreciably lower by the sharp downturn in South

Africa, falling by 7% to levels broadly in line with those seen

in 2005. This came about due to a combination of problems

throughout the country’s mining industry, namely safety-

related closures, strike action and continued pressures arising

from a shortage of skilled labour.

For palladium, GFMS estimated in the report that world

demand last year recorded a notable rise, driven by solid

increases in autocatalysts as well as within jewellery

fabrication. Within autocatalysts, which accounted for

58% of global fabrication, demand surged for a second

successive year, driven by rising light duty gasoline vehicle

production and the first significant entry of palladium

into diesel autocatalysts. On the supply side, palladium

remained somewhat vulnerable to South African supply

disruptions, with over 30% of palladium production

originating from the country in 2007. That said, lower

production in several regions last year contributed to the

return to a gross surplus in 2007, following a modest

deficit the year before.

Rhodium

From an opening of $8,925, rhodium prices over the

month moved steadily upwards, gaining ground after the

sell off during the second half of March, which saw the

price drop nearly $400 from the metal’s all time high of

$9,425. In April, the price gained a modest 2% intra-

month to a close of $9,150. Despite April’s marginal gain,

the rhodium price is still up by over 33% on a intra-year

basis, with such price strength commensurate with the

magnitude of the threats facing the metal’s supply. With

South Africa representing over four-fifths of rhodium

production in 2007, the ongoing problems and lack of

clarity over power supply will likely provide a floor at the

$9,000 level.

Rhodium Prices

Source: Johnson Matthey - basis 8am offer

Platinum

April 30th 2008


Platinum Last week’s decline back through $1,940 has dented the recovery off the $1,805 low, stabilising the immediate outlook. Support is situated at $1,888 and $1,805, with resistance provided by $1,953 and $2,020 — this level represents trendline resistance drawn off the $2,290 high, and is gradually declining in value.

A weaker bias prevails, and our view will become mildly negative below $1,888. In the event of a break below $1,805, further bearish implications will be forecast, exposing platinum to the primary $1,700 support point — long-term trendline resistance, turned support. The $1,700 level is regarded as a critical support point, and is not expected to give way during the corrective phase. Therefore, although a decline through $1,888 will trigger a sell signal, the longer-term trading strategy favours buying into weakness. Trading back above near-term trendline resistance should reduce the downside threat, underpinning the rally towards the $2,117 to $2,145 resistance zone.

Source: Reuters

Source: Reuters

USD/XPT (Daily)

16Jan08 30Jan 13Feb 27Feb 12Mar 26Mar 09Apr 23Apr

PrUSD

1,600

1,800

2,000

2,290

1,805

2,1172,070

1,888

USD/XPT (Monthly)

Jan00 Jul Jan01 Jul Jan02 Jul Jan03 Jul Jan04 Jul Jan05 Jul Jan06 Jul Jan07 Jul Jan08 Jul

PrUSD

500

1,000

1,500

2,000

Palladium

April 29th 2008


Palladium The recovery beyond $457 has not yielded the anticipated strength, and palladium is again approaching the $420 support base. Our preferred view is that this level will contain the near-term bear trend, but the topside failure provides warning that a break lower may now occur — postponing the positive view. Even if a break below $420 does develop, we will not express a bearish view, and continue to interpret the move off the $590 high as a correction within the medium-term bull trend.

If $420 does give way, the weaker trend is likely to protract towards the $390 to $380 area which represents a primary buying opportunity. Our longer-term view remains positive for palladium with a move into the $650 to $680 area still forecast. However, the depth of the retracement (from $590) has delayed the fulfilment of the described target. The market needs to re-gain $466 — accompanied by a daily close above $467 — before the outlook again becomes positive and, once palladium sur-mounts this hurdle, we would expect the firmer trend to push into the $514 to $519 resistance zone. Palladium weakness through $380 will jeopardise the bullish outlook, while a weekly close below $360 will signal a trend reversal.

Source: Reuters

Source: Reuters

USD/XPD (Daily)

17Dec07 31Dec 14Jan 28Jan 11Feb 25Feb 10Mar 24Mar 07Apr 21Apr

PrUSD

350

400

450

500

550

590

514

420

466

USD/XPD (Monthly)

Jul00 Jan01 Jul Jan02 Jul Jan03 Jul Jan04 Jul Jan05 Jul Jan06 Jul Jan07 Jul Jan08 Jul

PrUSD

200

400

600

800

1,095

438

313(A)

(B)

Last month’s decline indicates that the bull trend has stalled.

Weakness to line (B) is interpreted as a buying opportunity.

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