Above-ground Gold Stocks: A Growing Menace or a Phantom Menace? Neil Meader LBMA/LPPM Precious Metals Conference, Vienna 20 th October 2015
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
Other Fabricated Products Coverage: electronics applications decorative & other industrial end-uses dentistry
Other Fabricated Products Coverage: electronics applications decorative & other industrial end-uses dentistry Dentistry: potential scrap already included remaining stocks largely inaccessible
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
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
The Scale of Jewellery Stocks Reasons why stocks may be understated conversion from bar & coin
The Scale of Jewellery Stocks Reasons why stocks may be understated conversion from bar & coin Reasons why stocks may be overstated production losses
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
The Quality of Jewellery Stocks Far-from-market stocks: artefacts & modern high end pieces
The Quality of Jewellery Stocks Far-from-market stocks: artefacts & modern high end pieces Mass market stickiness return rates low
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
Net Jewellery Consumption Source: Metallis Consulting, Consolidated Gold Fields Ltd & GFMS Thomson Reuters
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
The Location of Jewellery Stocks Source: Metallis Consulting
The Scale of Investor Stocks Reasons why stocks may be understated institutional allowance too small
The Scale of Investor Stocks Reasons why stocks may be understated institutional allowance too small Reasons why stocks may be overstated conversion to jewellery
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
Retail Investment Source: Metallis Consulting, Metals Focus & GFMS Thomson Reuters
The Location of Retail Investor Stocks Source: Metallis Consulting
Institutional Stock Possibilities Volumes before the bull run: a few hundred tonnes?
Institutional Stock Possibilities Volumes before the bull run: a few hundred tonnes? Increase 2001-12 (basis market balance): c. 4,000 tonnes Implied end-2012 total stock: c. 4,500 tonnes
Institutional Stock Possibilities Volumes before the bull run: a few hundred tonnes? Increase 2001-12 (basis market balance): c. 4,000 tonnes Implied end-2012 total stock: c. 4,500 tonnes Feasibility of total: change 2012-2014: drop of at least 500 tonnes contribution from ETFs and Comex means change in other institutional stocks (basis market balance): o 2001-2012: increase of < 1,000 tonnes o 2012-2014: growth of a few hundred tonnes complication of lending being unwound
Institutional Stock Possibilities Volumes before the bull run: a few hundred tonnes? Increase 2001-12 (basis market balance): c. 4,000 tonnes Implied end-2012 total stock: c. 4,500 tonnes Feasibility of total: change 2012-2014: drop of at least 500 tonnes contribution from ETFs and Comex means change in other institutional stocks (basis market balance): o 2001-2012: increase of < 1,000 tonnes o 2012-2014: growth of a few hundred tonnes complication of lending being unwound Any threat from these stocks?
For information about our products and services contact Neil Meader on: neil.meader@metallisconsulting.com Tel: +44 (0)7949 005 404 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.