Charteris Treasury Portfolio Managers Ltd Goodacre Gold & Silver Presentation March 2014 For Professional advisers only. Not to be shown or given to any retail investors
1. Seasonal Pattern Gold & Silver tend to bottom around July and rise for the rest of the year 2. GOFO (Forward Rate) and Futures in backwardation very unusual signalling massive shortage of physical Gold for immediate delivery which is why holders of Gold seem unwilling to do the normal risk free arbitrage (sell spot & buy back cheaper in 3 months time). The other problem with the Arbitrage is that you might not get your Gold back (see point 3) 3. COMEX vaults being rapidly emptied of Gold If too many holders ask for delivery, a large problem will arise (see also point 2 about Asia) 4. Major Cycle lows the 10-10½ year cycle in Silver bottomed on 28 th June 2013 this cycle bottomed with a text-book capitulation sell off 5. Investor sentiment this is universally bearish towards Gold & Silver Assets sentiment acts as a reverse indicator when the herd is this bearish BUY See slide 12 COT report shows record speculator short positions in Gold & Silver. 6. Gold s replacement cost is around 1,500 an ounce Gold is currently $1,300 an ounce, it is not possible for Gold to stay below its replacement cost for very long 7. Selling from Gold ETF s (finite amount anyway) by Americans is drying up Buying from Asia & the Middle East continues on a massive scale 8. Global Money printing continues unabated despite tapering by the Fed, but massive printing still taking place in Japan & quite possibly China, if that economy starts to fade 9. Supply/Demand fundamentals very, bullish Net Global mine output is 2,200 Tonnes. Demand from China (1,200), India (800) and Japan (250) tonnes means that three Asian countries will take entire 2013 Global Mine Output 10. Ratio of Miners relative to Bullion recently at all time record since XAU Index formed in 1984 (miners cheap relative to Bullion) (see Slide 18) For professional intermediaries only 2
Source: Bloomberg Last Price 1,326.44 (as at 28 th Feb 14) For professional intermediaries only 3
Source: Bloomberg Last Price 21.2275 (as at 28 th Feb 14) For professional intermediaries only 4
(as at 28 th Feb 14) Source: Bloomberg For professional intermediaries only 5
(as at 28 th Feb 14) Source: Bloomberg Silver in Black Gold in Yellow HUI in Green For professional intermediaries only 6
Source: United Nations For professional intermediaries only 7
Source: ezilon.com More people live inside the red circle than outside the circle For professional intermediaries only 8
Source: Bloomberg For professional intermediaries only 9
Source: Bloomberg Peaks in the Gold/Silver ratio correlate to 10 year cycle in SILVER (see previous slide P.9) For professional intermediaries only 10
(as at 31 st Oct 13) Source: Kitco For professional intermediaries only 11
Futures Daily Volume Turnover in Gold Futures is roughly 10 times the volume witnessed in the Gold Physical Market. Physical Gold Daily Volume COMEX Features COT Report The COT report is widely analysed as it shows the balance of Open Interest in the futures market between speculators and commercials. Speculators are defined as day traders, Hedge funds etc, whilst commercials are defined as Bullion Banks, Mining companies etc (i.e. the trade). At major turning points, history shows time and time again that speculators tend to be on the wrong side of the move and commercials tend to be on the correct side of the market. i.e. at major lows, expect to see record short positions amongst the speculators - THIS WAS THE POSITION AS AT END OF DECEMBER 2013* *(as at 31 Dec 13) For professional intermediaries only 12
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Source: Bloomberg Supply Metric Tonnes Mine Production 2,600 Tonnes (Net 2,200 Tonnes) Scrap 1,400 Tonnes Miscellaneous / Total Supply 4,000 Tonnes Geographical Demand China 1200 Tonnes India 800 Tonnes Japan 250 Tonnes Total 2,250 Tonnes Demand Jewellery and other Fabrication Central Bank Purchases Bar Investment Net Producer De Hedging Miscellaneous Total Metric Tonnes 2,400 Tonnes 900 Tonnes 500 Tonnes 100 Tonnes 100 Tonnes 4,000 Tonnes (as at 31st December) For professional intermediaries only 17
(as at 17 th Mar 14) Source: Bloomberg This chart shows the Gold shares ratio relative to the Gold price, showing that gold shares are the cheapest they have been in history. For professional intermediaries only Last Price 13.0902 18
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Gold Cycles Year Month Weekly Day 40 480 2080 14600 3.36 40.4 173 1212 2.7 33.6 404 2828.83 10 43 300.52 6.3 27 190 Bold print denotes the cycle under which it is commonly known as. For professional intermediaries only 20
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1. Gold and Silver bullion are amongst the most volatile assets on Earth 2. Gold & Silver mining shares are even more volatile 3. Silver is more volatile than Gold therefore, if an investor is bullish and wants exposure to Precious metals, Silver will rise much more than Gold in a Bull Market 4. Cycle and GOFO analysis points to a major multi-year low ideal buying level 5. Mining Shares at record levels of cheapness to Bullion 6. WAY Charteris Gold and Precious Metals Fund has 70% exposure to Silver miners 7. This fund has the ability to outperform every other mutual fund in the UK. IF a Bull market in Silver and Gold develops (see separate presentation on the fund) For professional intermediaries only 23
Ian Williams Chartered FCSI & Chartered Wealth Manager Ian has spent the past 35 years trading equities, commodities and G7 government bonds, covering sales, research, market kt making and proprietary trading. He was a member of the London Stock Exchange for many years before joining Chase Manhattan Bank k( (now JP Morgan). He then worked kdfor Dresdner Kleinwort Benson and Guinness Mahon (now Investec) before becoming Chairman & Chief Executive of Charteris Treasury Portfolio Managers. Ian also manages the WAY Charteris Gold Fund (which was the top Fund in the country across all sectors in its first four months of trading, City Financial Strategic Gilt Fund (which was the top UK Gilt Fund in 2007 & 2009*) & The Elite Charteris Premium Income Fund. Ian Williams awarded Trustnet Alpha Manager in 2011 & accomplished a CityWire A rating in 2009, 2010 & 2011. Nick Taylor Chartered FCSI & Head of Private Client Wealth Management Nick Taylor has 38 years of international investment management experience, gained at Morgan Grenfell, Invesco, and was Managing Director at Cigna International Investment Advisors and Matheson Investment Management. An award winning manager, Nicholas has run equity portfolios for a broad range of investors, including institutional pension funds, such as the Cadbury Schweppes Pension Fund alongside running several million pounds of private client portfolios and investment trusts. Nick is also a Chartered Fellow of the Chartered Securities Institute. Mark Williams Mark graduated from Surrey University with a BA in 2005 and began his career in Investment Management with Forsyth Partners. He joined Charteris in November 2008 as a Junior Fund Manager assisting with the management of both individual private client portfolios as well as the management of the in house Charteris funds. For professional intermediaries only 24
London Office 8-9 Lovat Lane, London EC3R 8DW T: +44 (0) 20 7220 9780 Tel: +44 (0)20 7220 9780 Fax: +44 (0)20 7929 6925 www.charteris.co.uk Exeter Office Southernhay Lodge, 1a Barnfield Crescent, Exeter, EX1 1QT Tel: +44 (0)1392 422 184 Fax: +44 (0)1392 413 222 Head of Sales and Marketing Moritz Langlotz E. ml@charteris.co.uk T. +44 (0)20 7220 9780 Gibraltar Office 66a Main Street Gibraltar Enquiries mw@charteris.co.uk You can find us on Twitter, LinkedIn, Facebook and YouTube Authorised and regulated by the Financial Conduct Authority & the Gibraltar Financial Services Commission For professional intermediaries only 25
This presentation is issued by Charteris Treasury Portfolio Management Ltd which is authorised and regulated by the Financial Conduct Authority & the Gibraltar Financial Services Commission i Past performance is not a guide to future performance and investors may not get back the full amount invested The price of shares and any income from them may fall as well as rise On redemption of holdings investors may not receive back the full amount invested. Management and other fees may reduce the capital invested The information provided does not constitute advice or a personal recommendation for which the duty of suitability would be owed by us and you should seek your own advice as to the suitability of any investment matter mentioned here Professional advisers should be aware that this document is intended for their use only and this document is not to be shown or given to any retail investors The presentation is made on the basis of our current understanding of United Kingdom Tax laws, which may be subject to change in the future For professional intermediaries only 26