Precious Metals

Standard Bank Plc Cannon Bridge House 25 Dowgate Hill, London EC4R 2SB

Monthly report

Gold

1

Silver

6

Platinum Group Metals

9

2nd May 2008

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.

Precious Metals Sales and Trading • London 44-20-7815 4210 • New York 1-212-407-5102 • Hong Kong 852-2822-7888 Singapore 65-6533-7086 • Dubai 971-4-3300-011 • Tokyo 81-3-4520-6003 www.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

Precious Metals Spot gold in dollar terms against $; euro rate Dollar:E uro & G old P rice US $/€

US $/oz 1050

1.60

Non-commercial and Non-reportable Net Positions

C ontracts 000s 300

US $/oz 1050

250 950

1.50

850 1.40 750

950

200

850

150 750

100 1.30

650

550 1.20 J an-07 Apr-07 J ul-07 Oct-07 J an-08 Apr-08 P M F ix $

US $/€

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.

650

50

0 550 J an-07 Apr-07 J ul-07 Oct-07 J an-08 Apr-08 Non-C ommercial Non-R eportable S ettlement P rice

The combined speculative positions on COMEX stood at 601 tonnes at the start of April (down from 786 tonnes in midFebruary). 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 C ontracts 000s 700

C ontracts 000s 350 300

600

T onnes 1000

US $/oz 1,100

900

1,000

800

900

700

250 200

500

150

400

100

600

800

500

700

400

600

300 300

50 0 J an-07

ETF Holdings

200 Apr-07

J ul-07

V olume

Oct-07

J an-08

Apr-08

Open Interes t (rhs )

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.

500

200

400

100

0 300 J an-03 J an-04 J an-05 J an-06 J an-07 J an-08 G B S LS E

s treetT R AC K S

Other

G old P M F ix

iS hares

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.

Precious Metals Sales and Trading • London 44-20-7815 4210 • New York 1-212-407-5102 • Hong Kong 852-2822-7888 Singapore 65-6533-7086 • Dubai 971-4-3300-011 • Tokyo 81-3-4520-6003 www.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

Precious Metals Gold and the S&P 500 G old P rice 1050

Leasing Rates (%)

S &P 500 1600

3-mth

12-mth

2007

0.21%

0.26%

Jan-Apr 08

0.25%

0.42%

Apr 08

0.22%

0.46%

2007

0.19%

0.20%

Jan-Apr 08

0.48%

0.63%

Apr-08

0.37%

0.63%

2007

0.04%

0.03%

Jan-Apr 08

0.03%

0.22%

Apr-08

0.03%

0.37%

Average

950

1500

850 1400 750 1300

650

High

550 1200 J an-07 Apr-07 J ul-07 Oct-07 J an-08 Apr-08 Au $ pm fix

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 G old P rice 1050

XAU Index 220 200

950

180

850

Low

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.

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

160 750 650 550 J an-07 Apr-07

J ul-07

Au $ pm fix

Apr %

Ch.

140

US$/oz

2007

Jan-Apr 08

Apr 08

mom

yoy

120

Average

695.91

921.43

910.65

-6%

38%

100

High

841.75

1,023.50

951.50

N/a

N/a

Low

608.30

840.75

867.75

N/a

N/a

Oct-07 J an-08 Apr-08 XAU

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.

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.

Precious Metals Sales and Trading • London 44-20-7815 4210 • New York 1-212-407-5102 • Hong Kong 852-2822-7888 Singapore 65-6533-7086 • Dubai 971-4-3300-011 • Tokyo 81-3-4520-6003 www.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

Precious Metals Gold vs the Long Bond Yield

Gold and the VIX Index

G old P rice 1050

B ond Y ield 6.0

G old P rice 1050

950

5.5

950

V IX Index 38.5 33.5 28.5

850

5.0

850

23.5

750

4.5

750

18.5

650

4.0

650

3.5

550 J an-07 Apr-07

13.5

550 J an-07

Apr-07

J ul-07

Oct-07

Au $ pm fix

J an-08

Apr-08

30-yr B ond yield

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

836.50

871.00

-7%

29%

Gold Price ($/oz)

3.5 J ul-07

P M F ix $

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.

Key KeyIndicators Indicators Key Indicators

8.5

Oct-07 J an-08 Apr-08 V IX

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.

Precious Metals Sales and Trading • London 44-20-7815 4210 • New York 1-212-407-5102 • Hong Kong 852-2822-7888 Singapore 65-6533-7086 • Dubai 971-4-3300-011 • Tokyo 81-3-4520-6003 www.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 30th 2008

USD/XAU (Daily) Pr USD

1,030.80

950

900

850 849.50 800 17Dec07

31Dec

14Jan

28Jan

11Feb

25Feb

10Mar

24Mar

07Apr

21Apr

05May

Source: Reuters

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 initially 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.

USD/XAU (Weekly) Pr USD 52-week moving average = $788.25 900 800 773.50 700 642

600 500

Jul06

Sep

Nov

Source: Reuters

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

Jan07

Mar

May

Jul

Sep

Nov

Jan08

Mar

May

Silver • 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%.

Comex: Silver Non-Commercial and NonReportable Positions C ontracts US $/oz

000s 100.000

20 80.000

18 16

60.000

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

14

40.000

that of gold, with jewellery and small bar purchasers dipping in and out of the market, but not buying in much volume. At the

12 20.000

10

start of May there are again signs of some interest, but investor sentiment remains cautious.

0.000 J an-07 Apr-07

8 J ul-07

Oct-07

J an-08 Apr-08

Non-C ommercial S ettlement P rice

• While the market was dominated by speculative activity, during April, the end of the month and the start of May has seen

Non-R eportable

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

•Speculators’ net long position on COMEX fluctuated in a narrow

suggestions of some industrial purchasing. The market is wary

band over the month, reflecting comparatively low speculative

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

trading interest during the month. After dropping by almost

term, silver may struggle to make any sustainable gains during

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

the coming weeks, as investors and speculators are currently

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

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

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

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

subsequent price fall suggests a further contraction in the position

the next few weeks.

in the following week.

Spot Silver Price; Rate Dollar:E uro & SDollar:Euro ilver P rice cents /oz 2100

US $/€ 1.60

1900

1.52

1700

1.44

1500

1.36

1300

1.28

Silver, gold and copper; Jan 2007=100 Index 240 220 200 180 160 140 120 100

1100 J an-07 Apr-07 J ul-07 London F ix

1.20 Oct-07 J an-08 Apr-08 US $/€

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.

80 J an-07

Apr-07 G old

J ul-07

Oct-07

J an-08

S ilver

Apr-08 C opper

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.

Precious Metals Sales and Trading • London 44-20-7815 4210 • New York 1-212-407-5102 • Hong Kong 852-2822-7888 Singapore 65-6533-7086 • Dubai 971-4-3300-011 • Tokyo 81-3-4520-6003 www.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

Silver

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

The Gold : Silver Ratio

Prices (based on London fix)

60 Apr % Ch.

55

50

45

40 J an-07 Apr-07

J ul-07

Oct-07

J an-08

Apr-08

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.

US$/oz

2007

Jan-Apr 08

Apr 08

mom

yoy

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

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.

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

Open Interest

Price (US$/oz)

2007

27,013

120,884

13.38

Feb-08

49,480

182,057

17.66

20

Mar

44,089

157,973

19.16

15

Apr

41,498

143,333

17.48

ETF Holdings

Million Ounces 240 220 200 180 160 140 120 100 80 60 40 20 0 Apr-06 Nov-06 iS hares S ilver T rus t ZK B

25

Source: COMEX

10 5 0 J un-07

J an-08 E T F S ecurities London F ix

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.

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.

Precious Metals Sales and Trading • London 44-20-7815 4210 • New York 1-212-407-5102 • Hong Kong 852-2822-7888 Singapore 65-6533-7086 • Dubai 971-4-3300-011 • Tokyo 81-3-4520-6003 www.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

Silver April 30th 2008

USD/XAG (Weekly) Pr USD Ozs

21.24 Short-term support is situated just above $16

18 16.19 16

14 13.58 12 Feb07 Mar

Apr

May

Jun

Jul

11.03 Aug

Sep

Oct

Nov

Dec

Jan08

Feb

Mar

Apr

May

Source: Reuters

Silver The near-term bear trend is approaching short-term trendline support, and also the $16.32 to $16.19 support zone. This represents a pivotal area, and we continue to advise utilising the current weakness as an opportunity to enter into long positions. 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. USD/XAG (Monthly) Pr USD Ozs 16 14 12 10 8 6 4 Jul01 Jan02

Jul

Jan03

Jul

Source: Reuters

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

Jan04

Jul

Jan05

Jul

Jan06

Jul

Jan07

Jul

Jan08

Jul

Platinum Group Metals • Platinum traded sideways during April, as prices steadied against a backdrop of fresh announcements concerning downgrades to mine supply in 2008.

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

• 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.

US$/oz

2007

Jan-Apr 08

Apr 08

mom

yoy

Average

1,305

1,899

1,989

-3%

56%

High

1,544

2,276

2,065

N/a

N/a

• 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.

Low

1,112

1,522

1,918

N/a

N/a

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 intramonth 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.

Platinum & Gold Prices 1050

2,400 2,200

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 P latinum P alladium P rices G old

P latinum

Apr % Ch.

950

2,000

US $/oz

US $/oz

2,400

620

2,200

580 540

2,000

1,800

850

1,600

750

500

1,800

460

1,400

1,600

420

1,400

380

650

1,200

1,200

1,000 550 J an-07 Apr-07 J ul-07 Oct-07 J an-08 Apr-08 P latinum

G old

340

1,000 300 J an-07 Apr-07 J ul-07 Oct-07 J an-08 Apr-08 P latinum

P alladium (rhs )

Precious Metals Sales and Trading • London 44-20-7815 4210 • New York 1-212-407-5102 • Hong Kong 852-2822-7888 Singapore 65-6533-7086 • Dubai 971-4-3300-011 • Tokyo 81-3-4520-6003 www.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

Platinum Group Metals Dollar:E & P latinum P rice Platinum andurothe US Dollar: Euro US $/oz

US $/€

2,400

1.64

2,200

1.56

2,000 1.48

1,800 1,600

1.40

1,400

1.32

1,200 1.24

1,000 800 J an-06

1.16 J ul-06

J an-07

J ul-07

P latinum

J an-08

Platinum P1-month Lease latinum Leas ing R ates Rate % 8 7 6 5 4 3 2 1 0 -1 J an-07

May-07

S ep-07

US $/€

J an-08

1-month rate

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

Pt - ETF Allocations (All P t E Funds) TF

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 E TF Pd - ETF Allocations (AllP dFunds)

Ounces

Ounces

450,000

700,000

400,000

600,000

350,000

500,000

300,000 400,000

250,000

300,000

200,000 150,000

200,000

100,000 100,000

50,000 0 Apr-07

J ul-07

Oct-07

E T F S ecurities

J an-08 ZK B

Apr-08

0 Apr-07

J ul-07

Oct-07

E T F S ecurities

J an-08

Apr-08

ZK B

Precious Metals Sales and Trading • London 44-20-7815 4210 • New York 1-212-407-5102 • Hong Kong 852-2822-7888 Singapore 65-6533-7086 • Dubai 971-4-3300-011 • Tokyo 81-3-4520-6003 www.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

Platinum Group Metals NYMEX: Platinum Net Positions '000 ounces 800

NYMEX: Palladium Net Positions

US $/oz 2400

700

2200

600

2000

500

1800

400 1600

300 200 100 0 J an-07

J ul-07

Non-C ommercial P latinum price

Oct-07

US $/oz

1,400

550

1,200

500

1,000

450

800

400

600

600

350

1400

400

300

1200

200

250

0 J an-07

1000 Apr-07

'000 ounces 1,600

J an-08

200 Apr-07

J ul-07

Non-C ommercial P alladium P rice

Non-R eportable

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 aboveground 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

Palladium Prices (based on a.m. and p.m fix) Apr % Ch. US$/oz

2007

Jan-Apr 08

Apr 08

mom

yoy

Average

355

443

447

-9%

21%

High

382

588

469

N/a

N/a

Low

320

363

417

N/a

N/a

Oct-07

J an-08

Non-R eportable

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

Precious Metals Sales and Trading • London 44-20-7815 4210 • New York 1-212-407-5102 • Hong Kong 852-2822-7888 Singapore 65-6533-7086 • Dubai 971-4-3300-011 • Tokyo 81-3-4520-6003 www.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

Precious Metals 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 R hodium PPrices rices US $/oz 10,000 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 J an-06

J ul-06 Avg

J an-07

J ul-07 Low

J an-08 High

Rhodium

Source: Johnson Matthey - basis 8am offer

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 safetyrelated closures, strike action and continued pressures arising from a shortage of skilled labour.

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% intramonth 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.

IMPORTANT INFORMATION Copyright 2006, Standard Bank Plc, Cannon Bridge House, 25 Dowgate Hill, London EC4R 2SB. This document does not constitute an offer, or the solicitation of an offer for the sale or purchase of any investment or security. This is a commercial communication. If you are in any doubt about the contents of this document or the investment to which this document relates you should consult a person authorised under the Financial Services and Markets Act 2000 who specialises in advising on the acquisition of such securities. Whilst every care has been taken in preparing this document, no representation, warranty or undertaking (express or implied) is given and no responsibility or liability is accepted by Standard Bank Plc, its subsidiaries, holding companies or affiliates from time to time (the “Standard Bank Group”) as to the accuracy or completeness of the information contained herein. All opinions and estimates contained in this report may be changed after publication at any time without notice. Members of the Standard Bank Group, their directors, officers and employees may have a long or short position in currencies or securities mentioned in this report or related investments, and may add to, dispose of or effect transactions in such currencies, securities or investments for their own account and may perform or seek to perform advisory or banking services in relation thereto. No liability is accepted whatsoever for any direct or consequential loss arising from the use of this document. This document is not intended for the use of private customers in the United Kingdom. This document must not be acted on or relied on by persons who are private customers. Any investment or investment activity to which this document relates is only available to persons other than private customers and will be engaged in only with such persons. Standard Bank Plc is authorised and regulated in the United Kingdom by the Financial Services Authority (“FSA”) and entered in the FSA’s register (register number 124823). In other European Union countries this document has been issued to persons who are investment professionals (or equivalent) in their home jurisdictions. Neither this document nor any copy of it nor any statement herein may be taken or transmitted into the United States or distributed, directly or indirectly, in the United States or to any U.S. person except where those U.S. persons are, or are believed to be, qualified institutions acting in their capacity as holders of fiduciary accounts for the benefit or account of non U.S. persons (as such terms are defined in Regulation S under the Securities Act); The distribution of this document and the offering, sale and delivery of securities in certain jurisdictions may be restricted by law. Persons into whose possession this document comes are required by Standard Bank Plc to inform themselves about and to observe any such restrictions. You are to rely on your own independent appraisal of and investigations into (a) the condition, creditworthiness, affairs, status and nature of any issuer or obligor referred to and (b) all other matters and things contemplated by this document. This document has been sent to you for your information and may not be reproduced or redistributed to any other person. By accepting this document, you agree to be bound by the foregoing limitations. Value Added Tax identification number 625861525.

Precious Metals Sales and Trading • London 44-20-7815 4210 • New York 1-212-407-5102 • Hong Kong 852-2822-7888 Singapore 65-6533-7086 • Dubai 971-4-3300-011 • Tokyo 81-3-4520-6003 www.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

Platinum April 30th 2008

USD/XPT (Daily) Pr USD

2,290 2,117 2,070

2,000

1,888

1,805

1,800

1,600 16Jan08

30Jan

13Feb

27Feb

12Mar

26Mar

09Apr

23Apr

Source: Reuters

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.

USD/XPT (Monthly) Pr USD 2,000

1,500

1,000

500 Jan00

Jul

Jan01

Jul

Jan02

Source: Reuters

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

Jul

Jan03

Jul

Jan04

Jul

Jan05

Jul

Jan06

Jul

Jan07

Jul

Jan08

Jul

Palladium April 29th 2008

USD/XPD (Daily) Pr USD 550

590

514 500 466 450 420

400 350

17Dec07

31Dec

14Jan

28Jan

11Feb

25Feb

10Mar

24Mar

07Apr

21Apr

Source: Reuters

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 regain $466 — accompanied by a daily close above $467 — before the outlook again becomes positive and, once palladium surmounts 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.

USD/XPD (Monthly) Pr USD

1,095 Last month’s decline indicates that the bull trend has stalled. Weakness to line (B) is interpreted as a buying opportunity.

800 600

438 (B) 400 (A) 313 Jul00 Jan01

Jul

Jan02

Jul

Source: Reuters

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

Jan03

Jul

Jan04

Jul

Jan05

Jul

Jan06

Jul

Jan07

Jul

Jan08

200 Jul