12
2020 GOLD MARKET OUTLOOK
2 0 2 0 G O L D
M A R K E T O U T L O O K
Copyright CPM Group LLC 2020.
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verified, nor does CPM make any representation as to its accuracy or completeness. Any statements nonfactual in nature
constitute only current opinions, which are subject to change. While every effort has been made to ensure that the accuracy
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is not soliciting any action based on it. Information contained here should not be relied on as specific investment or market
timing advice. At times the principals and associates of CPM Group may have long or short positions in some of the markets
mentioned here.
Page 1 2020 Gold Market Outlook
Gold Annual average gold prices rose for the fourth consecu-tive year during 2019. The gains during 2019 were stronger than those seen in any of the three previous years, with annual average gold prices up 9.8%. Gold prices reached a six-year high on an intraday basis during 2019 and ended the year up 18.9% from the end of 2018. While CPM Group expected gold prices to rise over the course of 2019, the gains were more robust than initially anticipated. Some of the most influential factors that drove gold prices higher during 2019 were:
The reversal in Fed policy from tightening to loos-ening and a more accommodative posture by sev-eral other central banks around the world, reflectiveof central bank concerns over economic growth.
The escalation in trade tensions between the UnitedStates and many of its major trading partners, espe-cially China but spread around the world.
Strong net demand for gold as a reserve asset bycentral banks.
CPM Group expects gold prices to continue on their upward trajectory during 2020 and to reach new re-cord high levels in the medium term (over the next two to three years). With this forecast in mind, pur-chasing gold even at today’s relatively elevated levels should bode well for medium to long term investors.
The gold price rally of 2019 was primarily driven by shorter term investors in futures and options, with longer term investors, buying physical gold bars and coins, for the most part staying on the sidelines. The resilience of gold prices during 2019 and ongoing strength in gold prices during 2020 is expected to attract these longer term investors toward gold, which when coupled with
shorter term investors and continued healthy demand from central banks could drive gold prices higher in the medium term.
Gold Price Outlook
CPM Group expects gold prices are forecast to average $1,555 in 2020, up 11.4% over the annual average price in 2019. Gold prices are forecast to strengthen over the first three quarters of the year amid a fair bit of volatility. While the annual average gold price is forecast to in-crease 11.4% over the annual average in 2019, the swings in gold prices could be significant. Prices could poten-tially rise as high as $1,650 or drop as low as $1,450 over the course of the year. Donald Trump, who is up for re-election this year and also is facing impeachment, could actively create distractions both positive and negative that have the power to sway markets strongly one way or the other – or both ways - in the short term. While gold prices could swing violently over the course of this year, the bias for prices is expected to be upward.
Factors expected to influence gold prices during 2020.
Monetary Policy
Monetary policy is expected to remain accommodative across the globe over the course of 2020. The year started with the People’s Bank of China lowering reserve requirements and there is an expectation that it will loosen policy further over the course of the year. Other major central banks already took steps to loosen policy in 2019 and have expressed their willingness to further loosen already accommodative monetary policy if the need arises.
Central banks can be expected to have a somewhat asymmetrical policy response to economic condition during 2020, in that they are likely to loosen policy in response to signs of economic weakness but are not ex-pected to tighten policy in response to economic strength or inflation at least over the course of 2020.
With such a monetary policy set up, real rates would be compressed, turn negative, or become more negative (depending on the country or region under consideration), which would be supportive of gold prices because of the reduced opportunity cost to investors adding a non-income bearing asset to their portfolio.
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Gold Prices: 1 December 2010to31December2019
Page 2 2020 Gold Market Outlook
Return Of Inflation
Inflation has essentially been absent during the economic recovery since the Great Recession. This may start to change over the course of 2020, with
Globally loose monetary policy Ongoing economic growth Tightening labor market conditions Increased barriers to trade And firmer oil prices
Equity Markets
Equity markets have been on a tear, breaking new records or reaching multi-year highs every other day. While these markets are expected to continue posting positive returns during 2020, they are unlikely to repeat 2019’s stellar performance. Investors have been nervous about the ele-vated levels these markets have reached. Investors have been and should be expected to continue adding gold to their portfolios as a diversifier and hedge to their equity and debt assets, which are at extremely elevated levels.
Downside Risks To Equity Values
Limited fresh monetary and fiscal stimulus Focus on earnings which are expected to be com-
pressed and/or weaken because of growing laborcosts.
Potential for Democratic win in 2020 U.S. election,which could result in at least partial reversal of thelowered corporate taxes.
IMPACTHIGHLOW MODERATE
PRO
BAB
ILIT
YH
IGH
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E
While inflation may increase during 2020 it is not ex-pected to rise in a problematic fashion that would de-rail economic growth and be supportive of gold prices. The increase in inflation will however weigh more heav-ily on real rates, especially in the expected accommoda-tive monetary policy environment, which will be suppor-tive of gold prices.
Risks, Probabilities, and Impact Of Factors Affecting U.S. Dollar Gold Price
Higher Equity Market Volatility
Sharp Increase In
Equity Markets
Deterioration of E.U. economic data
U.S. Political Risk
Stronger Than Expected U.S. Inflation
International Politics- Policy Missteps
Sharp Decline In Equity Markets
Trade Wars
Deteriorationof U.S.
economicdata
Deterioration Of Chinese Economic Data
U.S. Housing Market Decline
Time Frame: Next Six Months (Solid Spheres). Longer Term (Dashed Circles)
U.S. Infrastructure Spending
Gold Market Seasonality
Creation Of Asset Bubbles
Climate Change
Debt Crisis
ESG Impact On Mining Costs
Note: Green bubbles depict factors that have a positive impact on gold prices. Red bubbles depict factors that have a negative impact on prices. Yellow bubbles depictfactors that can have a negative followed by a positive, or vice versa, impact on prices.The size of impact is based on the typical response of gold prices to the specific risk but also to the degree that the risk has already been factored into prices. The dashed circles represent long-term risks, which go beyond the next six month period.
Page 3 2020 Gold Market Outlook
Tailwinds To Equity Markets
Loose monetary policy. Stock buybacks will continue, but it is expected to
be a waning tailwind.
Trade Policy And The Shift Away From Globalization
Trade tensions between the United States and many of its major trading partners (especially China) had a direct negative impact on global business sentiment and the global manufacturing sector in 2019. Separately there has been the ongoing Brexit saga, which has had a relatively limited impact on global economic conditions but none-theless has been a risk the market has been monitoring for potential negative spillover effects.
There was some de-escalation in the tensions between the U.S. and some of its various trading partners in the mid-dle of December 2019, with a reformed trade deal be-tween the United States, Mexico, and Canada replacing the North American Free Trade Agreement with the US-MCA agreement. At the same time there also was a re-duction in a ‘No Deal’ Brexit outcome, with Boris John-son securing a majority vote in favor of the Withdrawal Agreement Bill for the UK to exit the EU. There was also some meeting of the minds on a so called ‘Phase One’ trade deal between China and the United States. The latter was still to be signed at the time of writing this report.
Even if an initial trade agreement is signed between China and the United States it is unlikely to have a major lasting positive impact on business sentiment. The deal is not expected to solve some of the long standing sticky issues in the relationship between these two extremely large and extremely different economies.
The lack of clarity on how these larger issues will be re-solved and the potential for reinstating and possibly add-ing new punitive tariffs over the course of the negotiation process are likely to weigh on business investment and thereby economic growth, adding to the positive environ-ment for gold.
Similarly, while there has been some positive develop-ments on the Brexit issue there still is the likelihood that the UK and EU will not be able to negotiate a deal by the end of 2020. This was the view of the EU leadership in mid-January. It could result in the EU trading without a deal, which could hamper economic growth in Europe.
The bottom line is that while there have been some positive developments on various trade issues in re-
cent weeks, there is still a lot that could go wrong and this should be a supportive factor for gold this year.
U.S. Dollar
The U.S. dollar is expected to move sideways with lim-ited upside potential over the course of 2020. The U.S. is expected to remain one of the best performing devel-oped economies during 2020, which should provide downside support to the dollar’s value. That said, eco-nomic growth is likely to improve in other developed economies during 2020 relative to 2019, which should cap the upside potential for the U.S. dollar during 2020. The dollar may weaken more against developing econ-omy currencies because of the greater upside potential for economic growth in these countries during 2020. This weakness against developing economy currencies and limited upside against developed market currencies should help gold demand and prices.
U.S. Elections
There is potential for heightened market volatility ahead of the U.S. presidential election in November 2020, which should provide some support to gold prices.
The volatility in markets could come from:
Various ploys played by the Republicans to createdistractions in the public away from the President’songoing impeachment proceedings and other legalissues.
These distractions from the impeachment could take on both a positive as well as negative garb. An example of a positive distraction would be the efforts being made to secure some sort of deal with the Chinese or North Kore-ans and an example of a negative distraction could be the bombing of Iran. The U.S. economy is on a strong foot-ing and the President would not want to upset that ahead of the election, which suggests that he is likely to take every step possible, ahead of the election, to ensure that the U.S. economy continues on such a solid footing.
Concerns of a Democratic candidate coming topower, which would result in at least some of theTrump fiscal stimulus being reversed hitting U.S.stocks hard.
Factors expected to influence gold prices beyond 2020.
Investor interest in gold is to a very large extent driven by the macroeconomic and political environment. This sec-tion discusses some of the longer term issues that CPM Group believes will influence gold prices.
Page 4 2020 Gold Market Outlook
Economic Recession While CPM Group does not expect an economic recession in 2020, there is a 100% probabil-ity that there will be recessions in the future.
When future recessions will occur, as well as how deep they will be and how long they will last, is extremely treacherous and difficult, if not impossible, to project
That being understood, for the purpose of long-term pro-jections of global, regional, and national economies, let alone individual commodities markets and other macro-economic trends, it is important to have a realistic view of future economic trends. The historical practice among economists of projecting an annual average rate of real economic activity over a number of years does not pro-vide a sufficiently granular economic forecast on which to base commodity market supply, demand, and price trends.
Ergo, recessions are built into the economic projections CPM uses, giving potential timing, depth, and duration. This is done with full knowledge and disclosure of the enormous probability that the projections most likely will not be accurate.
In 1978 CPM’s analysts projected a recession for1979. The double-dip recession did not occur until 1980 – 1982.
In 1987 CPM projected a short and shallow reces-sion in 1990. It occurred in 1991.
In 2000 CPM projected a short and shallow reces-sion for 2001. This proved correct.
In 2007 CPM projected a deeper recession in 2009.The recession began in 2007 and lasted into 2009.
Recessions begin for a variety of reasons.
Sometimes they are precipitated by monetary orfiscal constraints brought on by too strong of eco-nomic activity: The economy overheats, monetarypolicy overly tightens, economic capacity contractsas a result, or a combination of these factors leadsto a recession.
At other times economies slow or stagnant levels ofeconomic activity lead to the economy seemingly‘rolling over’ into recession.
And at yet other times, asset bubbles precipitaterecessions.
Projecting ‘the next’ recessions has been further com-pounded by the major structural changes that have oc-curred in monetary policies practiced by central banks around the world since the Great Recession and Global
Financial Crisis of 2007 - 2011, and the consequent trans-formations in global financial markets.
These developments, which began in a response tothe Great Recession and Global Financial Crisis of2007 – 2011, have wrought trends in monetary pol-icy and economic trends that were unforeseen bymonetary officials.
These trends have included a period of slower realgrowth, lower interest rates, lower inflation, and acontinued bifurcation of credit availability betweenlarge governments and corporations on the onehand and smaller corporate and individual consum-ers on the other.
These structural changes still are evolving in waysthat are unknown and have not been predicted bymonetary and government authorities, nor by main-stream, academic, or other economists.
This on-going ‘new financial era’ makes predictingrecessions that much more uncertain.
Additionally, there are structural changes occurring in global labor markets due to the increase in part time labor and automation, trends which accelerated following the Great Recession and are compounding the “problem” of low inflation forcing central banks to keep monetary pol-icy loose and precipitating some of the problems men-tioned above.
Since around 2014 CPM has been projecting a short, shallow recession, perhaps limited to the United States, the United Kingdom, and a couple of other countries in the 2019 – 2021 time period, followed by an over-charged recovery for a couple of years that then would lead to a deeper and longer recession in the 2023 – 2025 time frame.
CPM now expects the global economy will avoid the short, shallow recession previously projected, but experi-ence an extended period of sub-par economic growth punctuated by a recession around the middle of the pre-sent decade.
Global Debt
The rise of debt, both sovereign and private sector, to unprecedented levels at unprecedented rates, presents major concerns about the sustainability of long-term eco-nomic growth and the potential for combinations of:
a. deep, disruptive recessions,b. a new global financial crisis, andc. increased deterioration of international cooperation.
Page 5 2020 Gold Market Outlook
The enormous mountain of sovereign and private debt and its rapid growth are seen as being unsustainable by most observers, including CPM, suggestive of some im-minent ‘day of reckoning.’ CPM has that resolution at a distance of four years from the present, further out than many. It must be understood that such a view, that gov-ernment and private debt will lead to an inevitable finan-cial disaster, has been prevalent since at least the 1970s, with many financial and economic Cassandras having been proven wrong their entire careers. We all may be wrong again. The phobic fear of large numbers aside, it is possible that monetary policies may have been devised to prolong the present debt-fueled period of positive eco-nomic growth indefinitely.
Ultimately a deeper recession coinciding with a global
financial crisis is expected, even noting the just-made
exposition as to how the changed financial management
of global currency markets may preclude this. For the
purposes of needing to place these in time, the period of
2023 – 2025 has been maintained.
Near-Term Slow Growth
The current period of slower growth in real economic output in many parts of the world may continue over the next few years without too many major countries dipping into statistically outright recessions.
Slower growth in real economic activity, accompanied by cyclically strong employment in some countries, low in-flation, low interest rates, and relatively strong equity markets may last into 2021 or 2022.
Economic constraints normally associated with late stages of economic expansion in the past may not apply such limiting forces as they have previously, given com-puterization of both manufacturing and service industries, continued globalization of business (even within the con-text of increased trade disputes), and other secular trends toward surplus labor, manufacturing capacity, commer-cial real estate, and retail capacity. Transformed mone-tary policy may allow growth to persist and to accommo-date excessive fiscal stimulation by many governments.
A Bigger Recession Later
As time progresses the risks building up in economic conditions, fiscal policies, monetary policies, currency markets, and political conditions present real risks to on-going economic stability.
These risks have been pushed forward in time not only for the past decade, since the Global Financial Crisis and Great Recession of 2007 – 2011, but really for several
decades before that, perhaps measurably to 1981 al-though already in the late 1970s there were endless warn-ings of the coming economic collapse and the need for investors to shield their wealth through ‘crisis investing.’
Many observers have repeatedly warned about an inevita-ble squaring up of accounts, with a special focus on the enormous rise of government and private debt, and the explosive 12% per annum average growth in ‘paper’ as-sets including a host of derivative products since the 1980s.
These problems may persist for years yet. There could be a time when they lead to a more severe recession and fi-nancial crisis, as described earlier. Investors are wise to pay heed to the risks inherent in such profligate debt ex-pansion, but they also are wise to invest fully aware that for nearly a half century the dire warnings of imminent and complete financial collapse have not come true. There have been two major recessions since the 1970s and a wide range of lesser financial and economic crises, but each time the monetary authorities and banking sys-tem have found ways to repair the damage and restore economic growth.
Interest Rates
Immediately after the Global Financial Crisis and Great Recession of 2007 – 2009 CPM had written that it ex-pected interest rates would likely rise sharply at some point.
Around 2013 CPM changed its economic outlook and began writing that monetary policies and practices had changed in fundamental ways that:
(a) were not fully understood by virtually everyone at thatpoint, including central bankers, and
(b) may keep interest rates very low for a very longtime.
CPM still adheres to that view, but thinks that at some point the current set of fiscal and monetary policies could fail, at which time interest rates might spike.
Given the nature of the factors behind both low interest rates now and higher rates ‘at some crisis point in the future’ CPM expects that both current low rates and a future crisis-driven spike in rates could be good for gold but could potentially hurt the industrial precious metals - platinum and palladium.
Interest rates may stay low for an extended period of time, but at some point there could be a lenders’ strike on U.S. Treasuries and other sovereign borrowing, at which point interest rates might spike sharply higher.
Page 6 2020 Gold Market Outlook
The concept of a lenders’ strike on sovereign bor-rowers is highly disputed, given the self-destructiveconsequences such an action could have on finan-cial asset holders should it become uncontrolled.
A ‘controlled’ or restrained strike could occur,however.
One argument against such a possibility relates tothe absence of alternative investment opportunities.Where would investors put their money should theydecide government debt levels have reached unten-able levels. There are in fact alternatives, with fi-nancial markets already having shown tremendouscapacity to develop higher yielding derivative secu-rities to more than compensate them for receivinglow sovereign interest levels or even paying nega-tive interest rates for the ‘privilege’ of holding debt.(The answer to the question of why any financialinstitution would park its cash in sovereign debt forwhich it must pay interest lies in the ability to col-lateralize such assets and use them to acquirehigher yielding derivatives.) Additionally there arecertain institutional investors like pension fundsthat require predictable future cash flows that aretherefore tied to these debt investments.
Unresolved Cross Border Tensions
In recent years there has been an escalation in the hostili-ties between various countries and a breakdown in inter-national cooperation. This is likely to continue in the me-dium to long term and could in fact get worse before it gets better. As U.S. hegemonic capacities diminish new allegiances and alliances are being formed by other coun-tries. The U.S. government meanwhile has pursued poli-cies that are at best reducing its ability to influence the course of future international affairs, and possibly could severely preclude U.S. participation in future global deci-sion making.
One major relationship that is going to put ongoing strain on the global economy in years to come is the power struggle between the United States and China. The esca-lation of trade tensions between these two countries since 2018 and the consequence it had on the global economy provides some flavor of what can be expected going for-ward. There has been a de-escalation in the short-term tensions between these two countries at the time of writ-ing this report, but not a resolution to the problems. All of the bigger, long-term tensions remain, and possibly are in worse condition now than they were. There are numerous extremely difficult issues that need to be resolved and it will be very difficult to resolve them given the com-pletely different approaches and ideologies followed and
used by these two countries. This will matter to the global economy in the future because of sheer size of these two economies.
Climate Change
Climate change is a systemic risk to the global financial system. While it does not get the sort of attention as growing global debt does, climate change nonetheless has the potential to create disruptions on the scale of the Great Recession. While large piles of global debt are likely to worsen a bad economic situation, climate change is likely to perpetuate a bad economic situation.
An increase in the number and magnitude of natural dis-asters is putting unprecedented strains on the insurance industry. Insurance providers are highly integrated into the global financial system and very little has been done so far to determine how these entities would perform un-der severe stress condition. Furthermore, the withdrawal of the United States from the Paris Treaty and U.S. poli-cies that accelerate the deteriorating climate change only increase this risk in the medium to long term.
Investment Demand, Central Bank Buying, & Supply
All of this factors into CPM Group’s gold outlook.
It is CPM Group’s expectation that in the medium to long term these three gold market fundamentals –investment demand, central bank purchases, and supply - will come together in a way that would be very positive for gold prices.
Investment demand is forecast to rise in comingyears in response to the various factors reviewedabove.
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1950 1959 1968 1977 1986 1995 2004 2013 2022p
Central Bank DemandPrivate Investment
Million OzMillion Oz
Annual Data, Projected Through 2029GoldStockDemand
Central Banks Not Expected To Be A Source Of Supply As In The Past Net Sales
Net Purchases
Page 7 2020 Gold Market Outlook
Central banks meanwhile are expected to remainnet buyers of gold over at least the next decade.
Supply meanwhile, is expected to linger near re-cord high levels in the near term, but it is expectedto start declining in the medium term, around 2022,for several years. This decline in supply is expectedto be driven primarily by a reduction in mine sup-ply.
Weakness in supply coupled with a tussle between inves-tors and central banks for the reduced amounts of newly refined supply is expected to squeeze gold prices to new record high levels in the coming decade.
Bringing the discussion back to 2020, total supply is forecast to rise to 130.3 million ounces in the current year, up from 128.8 million ounces in 2019. The increase in total supply during 2020 is expected from an increase in both mine supply and secondary or scrap supply. The growth in mine supply during 2020 is expected to be marginal (up 0.2%) as the positive effect on mine supply from the capacity expansion following the last gold bull market fades. Much of the increase in total supply during 2020 is forecast to be driven by scrap recovery, which is expected to benefit from the projected gains in gold prices this year.
Gold fabrication demand is forecast to reach 96.6 million ounces in 2020, up 0.3% from 2019. The gains in fabrica-tion demand are expected to be driven by a possible re-covery in Chinese demand based on expectations of sta-bilization and possible improvement in Chinese eco-nomic growth as the year rolls on, ongoing global growth, albeit at a slower pace, and weakness in the U.S. dollar relative to emerging market economies. These positive factors are, however, expected to be offset by an
increase in gold prices and changing trends in jewelry styles as well as jewelry buying patterns neither of which are supportive of higher gold demand from jewelry.
Investment Demand is forecast to pick up in 2020 reaching 13.7 million ounces, up 19.7% from 2019 lev-els. While the cumulative amount of gold absorbed by investors is not particularly high, a near 20% gain in de-mand from this sector is expected to bode well for gold prices during the year. As mentioned before in this report, the gains in gold prices during 2019 were driven primar-ily by investors in derivatives and exchange traded funds, with little participation from investors in bars and coins. This is expected to change to some extent during 2020, with more longer term investors that typically invest in gold bars and coins entering the market.
Central Banks (Official Transactions)
Central banks have been a strong source of demand for gold during 2019. They are estimated to have added around 20 million ounces of gold to their holdings on a net basis. This would be the strongest level of net demand since 2015, when these entities reported net additions of 27.8 million ounces of gold to their holdings. That said, central bank demand for 2015 was skewed higher by the one-time movement of gold purchased between 2013 and 2015 from a separate account into official monetary re-serves by the People’s Bank of China in the middle of that year.
Central banks are expected to continue diversifying their reserve assets in 2020. They are expected to remain large net buyers of gold during 2020, potentially accumulating around the same level of gold that they did in 2019. This level of net accumulation of gold by these banks in com-bination with an increase in gold investment demand should help to push gold prices higher.
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Other UsesDental/ MedicalElectronicsDeveloped Country-JewelryDeveloping Country-Jewelry
Gold Fabrication DemandAnnual, Projected Through 2020
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Page 8 2020 Gold Market Outlook
MillionOunces
Gold Statistical Position
*Million Ounces; Source: CPM Group; Notes: There may be discrepancies in totals and percent changes due to rounding; Net official sales are indicated by negative numbers; Longer term projections are available in CPM Group's Gold Supply, Demand, and Price: 10-Year Projections report; e -- estimates; p -- projections; NM -- Not meaningful;
Supply 2012 2013 2014 2015 2016 2017 2018 2019 2020pMine Production China 13.0 13.8 14.5 14.5 14.9 13.7 12.9 13.8 14.5 Australia 8.1 8.6 8.8 8.9 9.0 9.1 9.3 8.6 8.9 United States 7.6 7.4 6.8 6.8 6.8 7.4 6.6 7.4 6.8 Russia 5.9 7.4 8.0 8.0 8.0 8.2 8.4 7.4 8.0 South Africa 5.0 5.4 4.9 4.6 4.5 4.3 3.9 5.4 4.6 Peru 5.2 4.9 4.5 4.7 4.9 4.9 4.6 4.9 4.7 Indonesia 2.2 1.9 2.2 3.1 2.6 3.2 4.2 1.9 3.1 Canada 3.4 4.0 4.9 5.1 5.2 5.5 5.9 4.0 5.1 Other Market Economies 30.6 32.2 35.3 34.2 36.7 36.2 35.2 39.0 36.5 Total 80.9 85.6 90.0 90.0 92.7 92.7 91.0 92.4 92.3 % Change Year Ago 3.2% 5.9% 5.1% 0.0% 2.9% 0.0% -1.8% 1.6% -0.1%
Secondary Supply 47.2 39.3 35.1 30.2 30.1 30.1 30.3 31.0 32.1 % Change Year Ago 0.9% -16.8% -10.7% -13.9% -0.4% 0.1% 0.8% 2.3% 3.5%
Transitional Economy Sales 3.5 2.2 2.8 2.9 4.3 5.0 4.9 5.2 5.5 % Change Year Ago - - - - - - - - -
Total Supply 131.5 127.1 127.8 123.1 127.0 127.7 126.2 128.6 129.9 % Change Year Ago 1.2% -3.4% 0.6% -3.7% 3.2% 0.6% -1.2% 2.0% 0.9%
Fabrication DemandIndustrial Demand Electronics 9.7 9.8 10.0 10.0 10.3 10.7 11.4 11.6 11.7 Dental/Medical 2.1 2.0 1.9 1.9 1.9 1.8 1.8 1.8 1.7 Other 1.8 1.6 1.7 1.7 1.7 1.8 1.7 1.8 1.8 Total 13.5 13.4 13.6 13.6 13.9 14.4 15.0 15.1 15.3 % Change Year Ago -0.4% -1.0% 1.3% 0.4% 1.7% 3.8% 4.3% 1.0% 0.9%
Jewelry Developed Countries 7.9 7.8 7.9 8.0 7.7 7.7 7.7 7.6 7.7 Developing Countries 61.2 70.8 72.1 75.1 72.0 74.9 75.4 73.5 73.6 Total 69.1 78.6 80.0 83.1 79.7 82.7 83.1 81.2 81.3 % Change Year Ago 2.2% 13.7% 1.7% 3.9% -4.0% 3.7% 0.5% -2.3% 0.2%
Total Fabrication Demand 82.6 92.0 93.5 96.7 93.6 97.0 98.1 96.3 96.6 % Change Year Ago 1.8% 11.3% 1.7% 3.4% -3.2% 3.7% 1.1% -1.8% 0.3%
Stock DemandTotal Official Transactions 11.4 17.7 16.7 5.3 7.0 10.9 16.2 21.0 20.0 % Change Year Ago 17.6% 54.8% -5.3% -68.4% 33.5% 55.0% 47.9% 30.0% -4.8%
Net Private Investment Official Coins 5.6 8.2 6.1 7.0 7.3 5.5 5.4 4.0 5.0 Bullion 29.2 6.8 9.3 12.1 16.0 12.3 6.1 4.8 5.3 Medallions 2.7 2.4 2.2 2.0 3.0 2.0 0.5 2.5 3.0 Total 37.5 17.4 17.6 21.1 26.3 19.8 12.0 11.3 13.3 % Change Year Ago -4.0% -53.5% 0.8% 20.1% 24.8% -25.0% -39.5% -5.1% 17.1%
Total Stock Demand 48.9 35.1 34.3 26.4 33.4 30.7 28.1 32.3 33.3 % Change Year Ago 0.3% -28.2% -2.3% -23.1% 26.5% -8.1% -8.4% 15.0% 2.9%
Total Demand(Fabrication Plus Stock Change) 131.5 127.1 127.8 123.1 127.0 127.7 126.2 128.6 129.9
CPM Group LLC
CPM Group is a fundamentally based commodities research shop. We develop our own proprietary estimates of gold,
silver, platinum, and palladium supply and demand on a global basis, drawing on every resource we can find, including our
own extensive list of contacts involved in precious metals around the world. We have been doing this sort of research and
analysis since the 1970s, far longer than anyone else in the business. We also undertake research in specialty metals, base
metals, energy and agricultural commodities. We are known for our basic fundamental research, a wide range of finan-
cially oriented consulting services, and our expertise in using financial derivatives to structure financing for producers,
refiners, industrial users, and investors interested in either hedging or investing in commodities. Our investment phi-
losophy is simple: We are value investors who base our decisions on what to buy, sell, hold, or avoid on the fundamentals
of each asset, and the macro-economic, financial and political environmental factors that we expect will affect that as-
set’s value. We have concerns, expressed in this report and elsewhere, about long-term imbalances in government deficit
spending, public and private debt, and a wide range of other economic and political factors. We don’t expect the world’s
financial system to collapse, however. That is not the way the world tends to work. More likely economic outcomes in the
real world lie between the extremes of cataclysmic collapses and nirvana. We advise our clients – and practice what we
preach – to have some of their wealth in gold and silver as an insurance policy against a catastrophic failure, but we also
advise them to invest other portions of their money in precious metals and other assets based on the assumption that that
sort of failure does not occur. We focus on investing based on likely scenarios, but with an eye always open to outlying
events that take the world’s markets by surprise. We have watched investors who were so worried about a collapse that
they missed some of the largest stock and bond market rallies of all times over the past 30 years, while watching their safe
haven assets fluctuate eight-fold in value up and down, and then up and down again. We prefer our clients to buy and sell
precious metals and other assets based on cyclical and other developments, while also maintaining that long-term insur-
ance policy in case the levee breaks.
CPM Group LLC
168 7th St.
Suite 310
Brooklyn, NY
11215
USA
T. 1-212-785-8320
www.cpmgroup.com
Published 2/1/2020
MONEX
For more information on gold, and how specific
gold, silver, palladium and platinum investments may be used to
diversify your portfolio, please contact:
MONEX DEPOSIT COMPANY
4910 BIRCH STREET
NEWPORT BEACH, CA 92660
(800) 949-4653
(949) 752-1400
