Page 1 of 3

Market Overview Update August 4th 2017

The US Dollar Index has seen ongoing weakness so far this year. This has been responded to by a general increasing of resources prices in US
dollars. It is anticipated that markets will continue to make sector rotation into resource-related shares and that market indices with sufficient
manufacturing orientation will consequently slow their ascent and stall before topping out as the bull cycle ends. This is unless the index in
question is heavily resources-oriented with export markets and a weakening currency, in which case the chart will show an incomplete wave
pattern like the JSE ALSI which must continue its progress through to completion of the cycle.
The US Dollar Index is seen as the key influence where the end of the bull cycle (5) precedes the same thing for US general equities indices.

This chart of the US Dollar Index

shows an over-reaching
negative divergence (red line)
that spans a 2 year period. This
can be seen as an end-of-cycle
indicator that supports the
displayed count. Whilst the 4-hr
chart (not here) shows a
positive divergence from the
end of June, this indication is
not on the daily chart. A high
probability of a small B-wave
correction is thereby indicated
at this time.

This updated expectation suggests that the catalytic effect of the weaker US Dollar should now be seen as an ongoing US dollar price
improvement for most resources despite a period of correction of the US Dollar Index. The USD/ZAR can also disconnect during this period.

The heavyweight amongst local gold miners is AngloGold. The chart is a very sorry picture of demise
Page 2 of 3

The company statement of 30th June

describes lower earnings and higher costs.

The chart describes a failed attempt to rally

along with its peers.

The divergence gives notice of the

probability of a rally that increases as the
price falls. However, this pattern can also be
eradicated before it matures or become a
smaller reproduction of its predecessor at A.

Selling has overpowered any short-term

rally attempt. The bears are back in control
until a lot more buyers appear.

The bad news is digested already and the

announced cost reduction plans are in
motion. The market now needs an
expectation of dramatic improvement of the
bottom line. This is not yet happening.

Any bit of good news will help, but no good news is ongoing bad news. The expected short-term strengthening of the US Dollar is not good
news for AngloGold or any other gold-related instrument in the short term. Only a general disregard of such action can be of any possible help.

The Old Mutual Gold Fund is closely following Anglogold which indicates a total absence of fund management.

The J150 gold mining index is actually performing and indicating better than either the pathetic Old Mutual Gold Fund or AngloGold, viz:
Page 3 of 3

On the left is the monthly data view and on the right is the daily data view. The bull arrived with a fast 1st wave which has been rapidly and
significantly retraced. This is in keeping with the highly volatile nature of this sector. The doom and gloom surrounding this sector seems to be
even greater than ever before. It lacks any and all of the attributes needed for investors. No one is even marginally happy to risk even a few
percent of a portfolio here. It has been behaving badly since the point 2 of early March on the chart went below the preceding point a. If it
were not for the divergence of the second half of June the pattern could be seen as an ongoing correction. Even so it can go either way here in
the short term.