Trading Precious metals on the JSE

Ways of investing in metals
6th Oct 2014
Mark Weetman, Vunani Private Clients

8486.48% gain in the last 82 years
02

Why Does Everyone Love Precious Metals (especially
Gold)?
 Gold has often been sought as a safe store of value
 offer unique inflationary protection, they themselves cannot be inflated (i.e. you can't print
more of them). When real rates of return in the equity, bond or listed property are negative,
people regularly flock to gold as an asset that will maintain its value
 Provide "upheaval insurance", whether financial/political/military - savings can be made
portable and stored
 Precious metals also provide low or negative correlation to other asset classes like shares
and bonds - even a small percentage of precious metals in a portfolio will reduce both
volatility and risk
 Silver role as an industrial metal - electrical appliances, medical products, use in batteries,
superconductor and microcircuit markets
 Platinum demand - automotive catalysts, jewelry accounts, petroleum and chemical refining
catalysts
 “And it’s just so shiny!” Gary Booysen, Vunani Private Clients

Commodities = diversification
Our typical risk profiles
5 – 8% allocation

What are my options?
1
3
4
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IndexName IndexCode InstrumentName Main resource Weight Perc. AllShare
Resource 10 J210 Anglo American Platinum & Iron Ore/Steel = weight 22.06 5.3
Resource 10 J210 Anglo American Platinum Platinum 1.55 0.37
Resource 10 J210 Anglogold Ashanti Gold 4.28 1.03
Resource 10 J210 African Rainbow Minerals Ltd Iron Ore/Steel 1.07 0.26
Resource 10 J210 Assore Ltd Iron Ore 0.65 0.16
Resource 10 J210 BHP Billiton Iron Ore/Petroleum 42.97 10.32
Resource 10 J210 Exxaro Resources Coal 1.15 0.28
Resource 10 J210 Gold Fields Gold 2.36 0.57
Resource 10 J210 Impala Platinum Hlds Platinum 2.9 0.7
Resource 10 J210 Sasol Oil 21 5.04
100 24.01
Trading equities?

Trade the derivative!
The Major Miners:
a) The Majors
a) Gold Fields (GFI)
b) Harmony (HAR)
c) AngloGold (ANG)
7x Gearing 9x Gearing 6.5x Gearing

The Minor Miners:
a) The Minors
a) DRD Gold
b) Village Main Reef
c) Sibanye
Based on Safex Margin only…
Clearer will whack you extra!
5.14x Gearing 1.54x Gearing 7.19x Gearing

Valuing gold as a commodity:
All-in costs include …
Labour
Energy
Infrastructure
G & A
Operating capex
Sustaining capex
Expansion capex - new project outlay (replacing mined ounces)
Exploration
Royalty, licensing, taxation
Financing and debt charges
$1,100-1,400 generally accepted all-in cost
Barrick $918/oz ($1-1,100 projected for 2013)

Valuing gold as a commodity:
“At $1,650 the gold mining industry was
struggling to make money.
At $1,200 …”
Gary Booysen, Vunani Private Clients

Should You Invest in Gold or Gold Stocks?

Exchange Traded Funds
Name Description (what the ETF tracks) Website
AfricaGold (ETFGLD) Gold bullion - each unit equals approximately 1/100th of a fine troy ounce of gold
bullion in ZAR terms
http://corporateandinvestment.standardbank.co.z
a/cib/products
AfricaPlatinum (ETFPLT) Platinum bullion - each unit equals approximately 1/100th of a fine troy ounce of
platinum bullion in ZAR terms
a/cib/products
AfricaPalladium (ETFPLD) Palladium bullion - each unit equals approximately 1/100th of a fine troy ounce of
palladium bullion in ZAR terms
a/cib/products
NewPalladium (NGPLD) Palladium bullion - each unit equals approximately 1/100th of a fine troy ounce of
palladium bullion in ZAR terms
www.etf.absacapital.com
NewGold (GLD) Gold bullion - each unit equals approximately 1/100th of a fine troy ounce of gold
bullion in ZAR terms
NewPlat (NGPLT) Platinum bullion - each unit equals approximately 1/100th of a fine troy ounce of
platinum bullion in ZAR terms
Commodity ETFs

It’s a fund… with a fact sheet and
everything!
Gold Price: $1,314.35/oz
Currency: 10.68
Rand Gold Price: R14,037.26
GLD trading at: R135.21 (last)
Gold Price: 96.39% backed
TER 0.4%
$1,314.35 x USDZAR10.68 x1/100 x 0.9639 = Fair Value
R135.30

Exchange Traded Notes
Alpha
Code
List of Exchange Traded Notes
Instrument Name Description Issuer Website
COLRMB RMB COAL ETN
Tracks the performance of the ICE, Richards Bay Coal future contract Rand Merchant Bank http://www.rmb.co.za/weTrade_ETN_Overview.asp
GOLDEN IB GOLDEN ETN Tracks the US Dollar Price of Gold
Investec Capital Markets http://www.investec.co.za/products-and-services/investing/Investec-
Gold-ETN/the-investec-gold-etn.html
NEWBCI NEWWAVE INDEXETN Tracks the Barclays Capital Commodity Index Pure Beta Total Return Index
ABSA Capital http://etf.absacapital.com/PRODUCTS/EXCHANGETRADEDNOTE
S/Pages/default.aspx
NEWPLT NEWWAVE PLAT ETN Tracks the spot price performance of the underlying precious metal, Platinum.
NEWSLV NEWWAVE SLV ETN Tracks the spot price performance of the underlying precious metal, Silver.
OILRMB RMB OIL ETN
Tracks the performance of the CME Crude Oil (WTI) future contract Rand Merchant Bank http://www.rmb.co.za/weTrade_ETN_Overview.asp
SBACI SBA COMMODITY-INDEX ETN
Tracks the performance of the Standard Bank Africa Commodity Index (SBAFCI) Standard Bank http://corporateandinvestment.standardbank.co.za/sa/products/tradi
ng_risk_mngt/exchange_traded_notes.jsp
SBACOP SB COPPER ETN
Tracks the performance of the Copper COMEX future contract Standard Bank http://corporateandinvestment.standardbank.co.za/sa/products/tradi
SBACRN SB CORN ETN
Tracks the performance of the Corn-CBOT future contract Standard Bank http://corporateandinvestment.standardbank.co.za/sa/products/tradi
SBAG1 GOLD COMMODITY-LINKER
Tracks the performance of the NYMEX Gold future contract Standard Bank http://corporateandinvestment.standardbank.co.za/sa/products/tradi
SBAOIL SB WTI OIL ETN
Tracks the performance of the NYMEX OIL WTI future contract Standard Bank http://corporateandinvestment.standardbank.co.za/sa/products/tradi
SBAPD1 PALADIUMCOMMODITY-LINKER
Tracks the performance of the NYMEX Palladium future contract Standard Bank http://corporateandinvestment.standardbank.co.za/sa/products/tradi
SBAPL1 PLATINUMCOMMODITY-LINKER
Tracks the performance of the NYMEX Platinum future contract Standard Bank http://corporateandinvestment.standardbank.co.za/sa/products/tradi
SBAS1 SILVER COMMODITY-LINKER
Tracks the performance of the NYMEX Silver future contract Standard Bank http://corporateandinvestment.standardbank.co.za/sa/products/tradi
SBAWHT SB WHEAT ETN
Tracks the performance of the Wheat CBOT future contracts Standard Bank http://corporateandinvestment.standardbank.co.za/sa/products/tradi
Commodity ETNs

JSE CFDS & SSFs
Contract Code Contract Description Underlying Code Category
EGLC CFD on ETFGLD ETFGLD Exchange Traded CFD
EGLQ African Gold ETF ETFGLD Single Stock
GLDC CFD on GLD GLD Exchange Traded CFD
GLDQ New Gold Issuer Limited GLD Single Stock
PLDC CFD on ETFPLD ETFPLD Exchange Traded CFD
PLDQ African Paladium ETF ETFPLD Single Stock
PLAC CFD on NGPLT NGPLT Exchange Traded CFD
PLAQ Newgold Platinum ETF NGPLT Single Stock
PLTC CFD on ETFPLT ETFPLT Exchange Traded CFD
PLTQ African Platinum ETF ETFPLT Single Stock
STRC CFD on STXRES STXRES Exchange Traded CFD
STRQ Satrix RESI STXRES Single Stock

JSE Quanto’s R7400: 1310.6 – 1312.40 (Near)
Gold R1,311.23
Currently R5,700 i.e. 21 x
Near
Far
JSE Quanto’s
Not equivalent to holding gold but gold price in rand!
RMB is the Market Maker you will trade!

Thank you for attending:
For more information:
tradingdesk@vvuunnaanniipprriivvaatteecclliieennttss..ccoo..zzaa
001111 –– 338822 22992200//33//77
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Trading Precious metals on the JSE

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