Gold Moves in Long Cycles. Source: Global Financial Data, US Bureau of Labor Statistics

Transcription

1 Shanghai December, /20/2013

2 Gold Moves in Long Cycles Source: Global Financial Data, US Bureau of Labor Statistics

3 Gold Price Declines 34% % % 15% Source: Bloomberg

4 The 1970 Bull Market Price Corrections Source: Dundee Wealth

5 Gold: Corrections Normal Last Price High on 09/30/ Average Low on 01/30/ Down 44% in 18 months March 78! 4 years Nov 73 Dec 75 Dec 76 Dec 77 Dec 78 Dec 79 Source: Bloomberg

6 Move Above Trend Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Source: Bloomberg

7 Broke Long-term Trend Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Source: Bloomberg

8 Europe Tightens Jan-08 Jun-08 Dec-08 Jun-09 Dec-09 May-10 Nov-10 May-11 Nov-11 Apr-12 Oct-12 Apr-13 Oct-13 Source: Dundee Wealth

9 Source: Mining.com Outflows from ETFs

10 Gold Shares Decline Source: Bloomberg

11 Costs of Mining an Ounce of Gold Source: Brent Cooks: Exploration Insights

12 Many Lose Money 70% 2012 Q1 13 Q % 50% 40% 30% 20% 10% 0% >$1,300 >$1,200 >$1,100 >$1,000 >$ 900 >$ 800 Proportion of selected mining operations with production costs greater then $/Au oz. Source: Intierra, Haywood Securities

13 Source: Intierra, Barrick Declining Discoveries

14 Lots of Money Raised 4,500 4, Annotated with avg transaction size 3,500 3,000 2,500 2,000 1,500 1, Total Value (C$M) Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Source: MEG, Capital IQ, Haywood Securities

15 Gold Stocks Lag Gold X n GOLDS Comdty XAU Index Source: Bloomberg

16 Growth of Central Bank Balance Sheets 2001 = 100 Source: IMF, International Financial Statistics; CEIC; Datastream; national data

17 Country Global Interest Rates Central Bank Rate CPI Rate Australia 3.50% 1.20% Belgium 0.75% 2.32% Canada 1.00% 1.30% China 6.00% 1.80% Germany 0.75% 1.70% France 0.75% 1.90% United Kingdom 0.50% 2.60% Italy 0.75% 3.10% Japan 0.10% -0.20% Netherlands 0.75% 2.30% Sweden 1.50% 0.70% Singapore 0.03% 5.30% United States 0.25% 1.70%

18 Dollar in Foreign Exchange Reserves 80% 70% 60% 50% 40% 30% 20% 10% 0% World Advanced Emerging Q2Q Source: IMF COFER Database

19 $350 $300 $250 $200 $150 $100 $50 $0 $ Billions Foreigners Buy Fewer --Three-month total net foreign acquisition of long-term securities Foreigners sold in credit crisis $50 -$100 Foreigners sold record amount through May Source: US Treasury TIC Data July 16, 2013

20 China: Growth Stabilized GDPNTTLY latest 7.8% Source: Bloomberg 09/02/2013

21 Production Flat Gold Production (million of ounces) Source: Goldsheetlinks.com

22 Source: World Gold Council Central Banks Net Purchases

23 Gold Reserves Country Percent US U.S. 76% Germany 63% France 57% Spain 38% India 6% Japan 2% China 2% * World Average 14% *Last reported

24 Annual Chinese Gold Net Imports from Hong Kong Source: Sharelynx

25 Gold Stocks Undervalued Pi Price to Book kvl Value Source: Bloomberg

26 Gold Stocks Undervalued (2) Source: Thomson Reuters, Credit Suisse research

27 Gold Stocks Undervalued (3) Source: Thomson Reuters, Credit Suisse research

28 Gold Stocks Yield More XAU Yield vs. S&P 3.50 n SPX n XAU Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec Source: Bloomberg *Aug 11, 2013

29 Gold Stocks Can Outperform Gold and Index Golds Gold Spot $/oz XAU Phila Gold & Silver GG US RGLD US Source: Bloomberg

30 Strong Stocks Outperform Stocks with Warts NEM US ABX US GG US GFI US Source: Bloomberg

31 Companies with Growth XAU PHILA GOLD & SILVER AU US NBM US GG US Goldcorp, with a strong balance sheet, high-margin mines in politically safe jurisdictions, and a strong pipeline, outperforms the index, while companies with residual hedging g obligations o or that made of high-cost acquisitions s underperformed. ed. 50 Source: Bloomberg

32 Royalty Business Model ** * Revenue royalties & streams ** Cost?

33 Advantages Prospect Generators More certain exposure Multiple opportunities Preserve bl balance sheet Disadvantages Time Low leverage Partners Still exploration risks

34 Barrick Gold, #1 No More $7.3 billion copper purchase; <2 years later, $3 billion write down Hedged gold at bottom, and finally bought back in 2011 at top Ri Raised ddiid dividend din mid-2012; id2012 slashed 75% in mid-2013 Early 2013 raised $3 billion equity with stock down Late 2013 raised $3 billion debt Net worth cut 50% Loss of $9.3 billion $17 million bonus to co-chairman Directors and management pay increases, $2.5m to $4.5m No longer #1 Stock 12-year lows 11/13

35 Pascua-Lama 2009: $2.5 b 2009: <$3 b July 2011: $4.7-$5 $5 b July 2012: $7.5 b February 2013: $8-$8.5 b April 2013: $8.5 b September 2013: $10 b Mid-2014 Late October 2013: suspended 11/13

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