Above-ground Gold Stocks: A Growing Menace or a Phantom Menace? Neil Meader. LBMA/LPPM Precious Metals Conference, Vienna 20 th October 2015

Transcription

1 Above-ground Gold Stocks: A Growing Menace or a Phantom Menace? Neil Meader LBMA/LPPM Precious Metals Conference, Vienna 20 th October 2015

2 Introduction Coverage: Jewellery Other fabricated products Retail investment Institutional investment The scale of above-ground gold stocks The quality of above-ground gold stocks Location detail: jewellery & retail investor stocks

3 Other Fabricated Products Coverage: electronics applications decorative & other industrial end-uses dentistry

4 Other Fabricated Products Coverage: electronics applications decorative & other industrial end-uses dentistry Dentistry: potential scrap already included remaining stocks largely inaccessible

5 Other Fabricated Products Coverage: electronics applications decorative & other industrial end-uses dentistry Dentistry: potential scrap already included remaining stocks largely inaccessible Decorative & other industrial end-uses: dispersion means potential for scrap limited

6 Other Fabricated Products Coverage: electronics applications decorative & other industrial end-uses dentistry Dentistry: potential scrap already included remaining stocks largely inaccessible Decorative & other industrial end-uses: dispersion means potential for scrap limited Electronics applications: scrap already included historic fabrication increasingly inaccessible price may not drive volumes

7 The Scale of Jewellery Stocks Reasons why stocks may be understated conversion from bar & coin

8 The Scale of Jewellery Stocks Reasons why stocks may be understated conversion from bar & coin Reasons why stocks may be overstated production losses

9 The Scale of Jewellery Stocks Reasons why stocks may be understated conversion from bar & coin Reasons why stocks may be overstated production losses Conclusion true figure closer to 83,000 tonnes grey areas significant range of 78-88,000 tonnes plausible always a large multiple of annual mine production

10 The Quality of Jewellery Stocks Far-from-market stocks: artefacts & modern high end pieces

11 The Quality of Jewellery Stocks Far-from-market stocks: artefacts & modern high end pieces Mass market stickiness return rates low

12 The Quality of Jewellery Stocks Far-from-market stocks: artefacts & modern high end pieces Mass market stickiness return rates low Jewellery demand almost always a net positive

13 Net Jewellery Consumption Source: Metallis Consulting, Consolidated Gold Fields Ltd & GFMS Thomson Reuters

14 The Quality of Jewellery Stocks Far-from-market stocks: artefacts & modern high end pieces Mass market stickiness return rates low Jewellery demand almost always a net positive Consumption & scrap price dependence negative demand only with high investment & prices

15 The Location of Jewellery Stocks Source: Metallis Consulting

16 The Scale of Investor Stocks Reasons why stocks may be understated institutional allowance too small

17 The Scale of Investor Stocks Reasons why stocks may be understated institutional allowance too small Reasons why stocks may be overstated conversion to jewellery

18 The Scale of Investor Stocks Reasons why stocks may be understated institutional allowance too small Reasons why stocks may be overstated conversion to jewellery Conclusion true figure a little under 36,000 tonnes grey areas significant range of 34-39,000 tonnes plausible again, a high multiple of annual mine production

19 Retail Investment Source: Metallis Consulting, Metals Focus & GFMS Thomson Reuters

20 The Location of Retail Investor Stocks Source: Metallis Consulting

21 Institutional Stock Possibilities Volumes before the bull run: a few hundred tonnes?

22 Institutional Stock Possibilities Volumes before the bull run: a few hundred tonnes? Increase (basis market balance): c. 4,000 tonnes Implied end-2012 total stock: c. 4,500 tonnes

23 Institutional Stock Possibilities Volumes before the bull run: a few hundred tonnes? Increase (basis market balance): c. 4,000 tonnes Implied end-2012 total stock: c. 4,500 tonnes Feasibility of total: change : drop of at least 500 tonnes contribution from ETFs and Comex means change in other institutional stocks (basis market balance): o : increase of < 1,000 tonnes o : growth of a few hundred tonnes complication of lending being unwound

24 Institutional Stock Possibilities Volumes before the bull run: a few hundred tonnes? Increase (basis market balance): c. 4,000 tonnes Implied end-2012 total stock: c. 4,500 tonnes Feasibility of total: change : drop of at least 500 tonnes contribution from ETFs and Comex means change in other institutional stocks (basis market balance): o : increase of < 1,000 tonnes o : growth of a few hundred tonnes complication of lending being unwound Any threat from these stocks?

25 For information about our products and services contact Neil Meader on: Tel: +44 (0) Metallis Consulting Limited, October 2015 Disclaimer: Although every effort has been made to undertake this work with care and diligence, Metallis Consulting Ltd cannot guarantee the accuracy of any information, forecasts or assumptions. Nothing contained in this presentation constitutes an offer to buy or sell securities or commodities and nor does it constitute advice in relation to the buying or selling of investments. It is published only for informational purposes. Metallis Consulting Ltd does not accept responsibility for any losses or damages arising directly or indirectly from the use of this presentation.