8/7/2019 Gold Survey 2009 Launch Presentation
1/35
Gold Survey 2009Gold Survey 2009Philip KlapwijkPhilip Klapwijk
London 7London 7ththA ril 2009A ril 2009
8/7/2019 Gold Survey 2009 Launch Presentation
2/35
8/7/2019 Gold Survey 2009 Launch Presentation
3/35
GFMS gratefully acknowledge the generousGFMS gratefully acknowledge the generous
support from the following companies for thissupport from the following companies for this
yearsyears Gold SurveyGold Surveyand its twoand its two UpdatesUpdates
Tanaka Precious Metals Group www.pamp.com
Commerzbank Global
Precious Metals Valcambi sa
Barrick Gold CorporationWorld Gold Council Dubai Multi Commodities
Centre
JPMorgan Chase Bank
ScotiaMocatta www.newmont.comwww.IBKCapital.com www.standardbank.com
Johnson Mattheywww.nyse.com/nyseliffeus www.commodities.sgcib.comwww.ljgold.com
Kinross Gold Corporation www.randrefinery.com INTL Commodities, INC.www.natexiscm.com
8/7/2019 Gold Survey 2009 Launch Presentation
4/35
The GFMS Groups Unique Researchapa es rogramme
r x r y u .
Not just desk-based: Over 300 companies and organisations in39 countries visited by our personnel in the last 12 months.
Annual Gold, Silver and Platinum & Palladium Surveys.
Also, weekly, monthly, quarterly & bi-annual reports plusforecasts and a wide ran e of consultanc services across allthe precious and base metals & steel.
. . .or email: [email protected]
8/7/2019 Gold Survey 2009 Launch Presentation
5/35
o r ceso r ces upp yupp y
8/7/2019 Gold Survey 2009 Launch Presentation
6/35
US Dollar Gold PriceUS Dollar Gold Price
Weekly AveragesWeekly Averages
900
1000DOLLARDOLLAR 20072007 20082008 Q1 2009Q1 2009
AverageAverage 695.39695.39 871.96871.96 908.41908.41
800 IntraIntra--YearYear 30.3%30.3% 2.7%2.7% 4.8%4.8%
YearYear--onon--YearYear 15.2%15.2% 25.4%25.4% --1.8%1.8%
600U
S$/o
US$/oz
400
5002626--week moving averageweek moving average
300
J an- J ul- J an- J ul- J an- J ul- J an- J ul- J an- J ul- J an- J ul- J an-
Source: GFMS; Thomson Reuters EcoWinSource: GFMS; Thomson Reuters EcoWin
8/7/2019 Gold Survey 2009 Launch Presentation
7/35
Euro Gold PriceEuro Gold Price
Weekly AveragesWeekly Averages780
EUROEURO 20072007 20082008 Q1 2009Q1 2009
Avera eAvera e 506.80506.80 593.09593.09 698.17698.17
580z
Euro/ozIntraIntra--YearYear 17.7%17.7% 6.9%6.9% 10.0%10.0%
YearYear--onon--YearYear 5.5%5.5% 17.0%17.0% 13.1%13.1%
480Euro/
380 2626--week moving averageweek moving average
280
J an- J ul- J an- J ul- J an- J ul- J an- J ul- J an- J ul- J an- J ul- J an-
Source: GFMS;Source: GFMS; ThomsonThomson Reuters EcoWinReuters EcoWin
8/7/2019 Gold Survey 2009 Launch Presentation
8/35
Turkish & Indian Gold PricesTurkish & Indian Gold Prices
170
180
0)
140150
2008=1
110
120
130
nd
Jan
90
100
Index(
70
Jan-08 Mar-08 May-08 Jul-08 Sep-08 Nov-08 Jan-09 Mar-09
Source: GFMSSource: GFMS
8/7/2019 Gold Survey 2009 Launch Presentation
9/35
Gold, Silver, Base Metals PricesGold, Silver, Base Metals Prices
and CRB S&P 500 Indicesand CRB S&P 500 Indices
GoldGold
CRB IndexCRB IndexSilverSilver
S&P 500S&P 500
CopperCopperLeadLead
Source:Source: GFMSGFMS
8/7/2019 Gold Survey 2009 Launch Presentation
10/35
Real and Nominal Gold PricesReal and Nominal Gold Prices
real US$ rice in constantreal US$ rice in constant 20082008 termsterms1800
New record nominalannual average reached in
1980 average: $1,6071980 average: $1,607
1200z
2008, but in real terms
todays prices are stil l wellshort of historical peaks.
900US$/
Real PriceReal Price
300
600
0
Source: GFMS,Source: GFMS, Thomson ReutersThomson Reuters EcoWinEcoWin
8/7/2019 Gold Survey 2009 Launch Presentation
11/35
Su lSu l
8/7/2019 Gold Survey 2009 Launch Presentation
12/35
GFMS Mine Supply DatabaseGFMS Mine Supply Database OverOver 100 com anies anal sed on a uarterl basis100 com anies anal sed on a uarterl basis
production/costs/corporate activityproduction/costs/corporate activity
Over 300 mines recorded on a annual basisOver 300 mines recorded on a annual basis
Over 320 projectsOver 320 projects projected production profile, startprojected production profile, start--upup
date,date, capexcapex, reserves, resources, reserves, resources n orma m ne pro uc on measure on a coun ryn orma m ne pro uc on measure on a coun ry-- yy--
country basiscountry basis
Costs measured at 70% of Western World gold productionCosts measured at 70% of Western World gold production
Database used to record detailed quarterly producerDatabase used to record detailed quarterly producerhedging datahedging data
MM
8/7/2019 Gold Survey 2009 Launch Presentation
13/35
Gold Mine ProductionGold Mine Production
3000Rest of World 2008 down 62t2008 down 62t
oror 2.5%2.5% oo
2500
. , , ,
1500ton
nes
1000
0
8/7/2019 Gold Survey 2009 Launch Presentation
14/35
Major Western World Mines' Cash CostsMajor Western World Mines' Cash Costs(in money(in money--ofof--thethe--day terms)day terms)
900
1000
800
600S
$/oz AustraliaAustralia
400
500
USAUSA
South AfricaSouth Africa
300
CanadaCanada
Q1-04 Q1-05 Q1-06 Q1-07 Q1.08
Source: GFMSSource: GFMS
8/7/2019 Gold Survey 2009 Launch Presentation
15/35
Change in Supply from AboveChange in Supply from Above--Ground StocksGround Stocks
300
2008 compared to 2007
200
0tonnes
-200
-100
-300
Official Sector Scrap
8/7/2019 Gold Survey 2009 Launch Presentation
16/35
CBGA and Other Gold SalesCBGA and Other Gold Sales
700Other
CBGA
500
200
300tonnes
0
100
-100
1998 2000 2002 2004 2006 2008
CBGA refers to signatories to the Central Bank Gold Agreement
Other refers to all other countries
8/7/2019 Gold Survey 2009 Launch Presentation
17/35
Regional Changes in Scrap SupplyRegional Changes in Scrap Supply
160
100
120
60
80tonne
20
40
Middle
East
East Asia Other I ndian SC Europe North
America
8/7/2019 Gold Survey 2009 Launch Presentation
18/35
DemandDemand
8/7/2019 Gold Survey 2009 Launch Presentation
19/35
World Gold FabricationWorld Gold Fabrication
4500Developing Countries
2008 down2008 down 226t226t
3500
4000 oror 7.3%7.3% yoyyoy
2000
2500
ton
nes
1000
1500
0
500
8/7/2019 Gold Survey 2009 Launch Presentation
20/35
JewelleryJewellery Fabrication: Winners and LosersFabrication: Winners and Losers
40
(Figures represent year-on-year change, i.e. 2008 less 2007)
20
-20
es
EastAsiaNorth
America
OtherLatinAmerica
-60
-ton
MiddleEurope
-100
-80
Indian
-120 S-C
8/7/2019 Gold Survey 2009 Launch Presentation
21/35
database and thedatabase and the Brady TrinityBrady Trinitysystem.system.
,,
instrument, year of expiry and currency.instrument, year of expiry and currency.
sensitivities are calculated.sensitivities are calculated.
Com rehensive lobal hed e book anal sis is ublishedCom rehensive lobal hed e book anal sis is ublished
once per quarter by GFMS, in association withonce per quarter by GFMS, in association with SocitSocit
Gnrale.Gnrale.
8/7/2019 Gold Survey 2009 Launch Presentation
22/35
Net Market Impact of Producer HedgingNet Market Impact of Producer Hedging
150
Su l
50
-150
-
tonnes
-250 Demand
-350
.Q
1
.Q
3
.Q
1
.Q
3
.Q
1
.Q
3
.Q
1
.Q
3
.Q
1
.Q
3
.Q
1
.Q
3
.Q
1
.Q
3
.Q
1
.Q
3
.Q
1
.Q
3
00
00
01
01
0 0 03
03
0 0 05
05
06
06
07
07
08
08
8/7/2019 Gold Survey 2009 Launch Presentation
23/35
Total Accelerated Supply from Producer Hedging*Total Accelerated Supply from Producer Hedging*
4
35
40Annual average ofAnnual average of
--
3nd-year
25
30$/oz
2
to
nnes,
20
ta
ngoU
1(1000s)
10co
0
1994 1996 1998 2000 2002 2004 2006 2008
0
* outstanding forward sales, loans and net delta hedge against positions
8/7/2019 Gold Survey 2009 Launch Presentation
24/35
Investment in 2008Investment in 2008
The first seven months of the year generally saw net buying byThe first seven months of the year generally saw net buying bywestern investors:western investors:
Growth in investment led to surge above $1,000.Growth in investment led to surge above $1,000.
US dollar decline substantial, due in part to falling short term USUS dollar decline substantial, due in part to falling short term USinterest rates and downturn in US housin .interest rates and downturn in US housin .
Commodities saw large inflows, partly because of rising inflation.Commodities saw large inflows, partly because of rising inflation.
Financial market turmoil led to safe haven buying of gold.Financial market turmoil led to safe haven buying of gold. After midAfter mid--July, however, the gold market experienced a massive sellJuly, however, the gold market experienced a massive sell
off, driven primarily by a major rebound in the dollar and liquidationoff, driven primarily by a major rebound in the dollar and liquidationin the overall commodities complex, particularly crude oil.in the overall commodities complex, particularly crude oil.
From September onwards a huge deleveraging by funds in futuresFrom September onwards a huge deleveraging by funds in futuresand OTC markets took place. In contrast, purchases of physical goldand OTC markets took place. In contrast, purchases of physical goldboth directly and via ETFs grew strongly.both directly and via ETFs grew strongly.
8/7/2019 Gold Survey 2009 Launch Presentation
25/35
World InvestmentWorld Investment
25
301200Value of World Investment
20900
US
15600
$Billi
onT
onnes
5
10
300
00
Source: GFMSSource: GFMS
8/7/2019 Gold Survey 2009 Launch Presentation
26/35
Gold Exchange Traded FundsGold Exchange Traded Funds
1800 As of 31/12/08, 321t increasefrom 31/12/07
1400
Dubai DGX Julius Baer
Xetra Gold ETF Securit ies
Goldist ZKB Gold
800
1000
to
nnes i Shares COMEX Gold Trus t SPDR Gold Shares
NewGold Gold Deben tu res GBS LSE
400
600GBS ASX Central Gold Trust
Central Fund of Canada
0
200
Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09
Source: Respective issuers
8/7/2019 Gold Survey 2009 Launch Presentation
27/35
Investors positions in gold futures volatile in 2008Investors positions in gold futures volatile in 2008(non(non--commercial & noncommercial & non--reportable positions inreportable positions in ComexComex & CBOT futures)& CBOT futures)
950
1050300
Gold PriceAverage size of netAverage size of net investorinvestor long.long.20052005 132k contracts132k contracts
20062006 135k contracts135k contracts
850200,t
housa
nds
20072007 157k contracts157k contracts
20082008 177k contracts177k contracts
750
150US$/oz
ns(contract
550100
Netpositio
45050
3500Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Dec-07 Jul-08 Dec-08
8/7/2019 Gold Survey 2009 Launch Presentation
28/35
Price OutlookPrice Outlook
8/7/2019 Gold Survey 2009 Launch Presentation
29/35
Supply in 2009Supply in 2009
Mine Production in the current year expected to increaseMine Production in the current year expected to increase
Asia, Australia, and west Africa providing the growth.Asia, Australia, and west Africa providing the growth. Official Sales ex ected to a ain remain weak in 2009Official Sales ex ected to a ain remain weak in 2009
with CBGA sales well below quota and countries outsidewith CBGA sales well below quota and countries outside
the Agreement remaining small scale buyers on a netthe Agreement remaining small scale buyers on a netas s. ny sa es on y expec e n .as s. ny sa es on y expec e n .
Scrap has increased substantially this yearScrap has increased substantially this year--toto--date. Fulldate. Full
in Q1 2009 scrap supply surpassedin Q1 2009 scrap supply surpassed jewelleryjewellery fabricationfabricationvolumes.volumes.
8/7/2019 Gold Survey 2009 Launch Presentation
30/35
Demand in 2009Demand in 2009
Historically high prices and increased volatility will have a dramaticHistorically high prices and increased volatility will have a dramatic
im act on lobalim act on lobal ewellereweller demand. Economic downturn alsodemand. Economic downturn also
having a marked impact in many countries. Concentrated buyinghaving a marked impact in many countries. Concentrated buyingexpected on price dips, e.g. on any excursion to $800expected on price dips, e.g. on any excursion to $800--$850.$850.
Other fabrication (excluding coins) to be hit by slowOther fabrication (excluding coins) to be hit by slow--down in globaldown in global
economic rowth.economic rowth.
Prospects for further deProspects for further de--hedging are limited by the now very lowhedging are limited by the now very low
outstandin roduceroutstandin roducer hed ebookhed ebook..
Investor interest in gold is expected to remain strong throughoutInvestor interest in gold is expected to remain strong throughout
8/7/2019 Gold Survey 2009 Launch Presentation
31/35
Investment IssuesInvestment Issues The effects of the globalThe effects of the global economic and financial crisis and theeconomic and financial crisis and thefiscal and monetary policy response to this continuefiscal and monetary policy response to this continue to provideto providea strong investment case for gold:a strong investment case for gold:
Heightened risk aversion among investors; capital preservationHeightened risk aversion among investors; capital preservationparamount,paramount,
Short term interest rates close to zero in major currencies andShort term interest rates close to zero in major currencies andnegative in real terms,negative in real terms,
ass ve r se n governmen sca e c s e.g. orecas . r onass ve r se n governmen sca e c s e.g. orecas . r onthis FY in US) that will stretch into mediumthis FY in US) that will stretch into medium--long term,long term,
Mone su l rowth ra id central banks embarkin u onMone su l rowth ra id central banks embarkin u on
quantitative easing and debt monetisation; inflation will requantitative easing and debt monetisation; inflation will re--emerge asemerge asmajor concern,major concern,
o ar par cu ar y vu nera e u o er currenc es a so no v eweo ar par cu ar y vu nera e u o er currenc es a so no v eweas attractive safe havens.as attractive safe havens.
8/7/2019 Gold Survey 2009 Launch Presentation
32/35
Price OutlookPrice Outlook Investors willInvestors will remain the principal driver of the expectedremain the principal driver of the expected nextnextleg of the bull marketleg of the bull market to ato a new highnew high above the $1,000 mark withabove the $1,000 mark with$1,100 a real ossibilit .$1,100 a real ossibilit .
In the medium term, prices could retrace from current levels;In the medium term, prices could retrace from current levels;the mid to low $800s are athe mid to low $800s are a possible low over the rest of this year,possible low over the rest of this year,
by bargain hunting and stock replenishment.by bargain hunting and stock replenishment.
Supplys reaction to price rally limited so far: mine productionSupplys reaction to price rally limited so far: mine productionexpected to rise slightly in 2009 while official sector salesexpected to rise slightly in 2009 while official sector sales shouldshouldbe weaker. Surging scrap expected to continuebe weaker. Surging scrap expected to continue materially tomaterially toaffect prices during periods of strength.affect prices during periods of strength.
Imbalances in the market suggest that sooner or later the goldImbalances in the market suggest that sooner or later the goldprice will have to retreat. Nevertheless, this is most unlikely toprice will have to retreat. Nevertheless, this is most unlikely tooccur untiloccur until endend--20092009 and potentially not until well into 2010 givenand potentially not until well into 2010 givencurrent economic conditions, which favour gold investment.current economic conditions, which favour gold investment.
8/7/2019 Gold Survey 2009 Launch Presentation
33/35
23 April 2009:23 April 2009: Platinum & Palladium Survey 2009Platinum & Palladium Survey 2009
13 May 2009:13 May 2009: World Silver Survey 2009World Silver Survey 2009
September 2009:September 2009: Gold Survey 2009Gold Survey 2009 Update 1Update 1
8/7/2019 Gold Survey 2009 Launch Presentation
34/35
8/7/2019 Gold Survey 2009 Launch Presentation
35/35