Section I. Macro $2, $1,8 $1,6 $1,4 $1,2 $1, $8 $6 $4 $2 Fig.1. and US Real Rates US Real Rates Price 2 22 24 26 28 21 212 4% 3% 2% 1% -1% -2% -3% -4% - $4,5 Fig.2. Fed Balance Sheet ($B) $4, $3,5 $3, $2,5 $2, $1,5 $1, $5 1995 1999 23 27 211 1,6 1,4 1,2 1, 8 6 4 2 Fig.3. and ECB Real Rates ECB Real Rates 2 22 24 26 28 21 212 4% 3% 2% 1% -1% -2% -3% 3,5 Fig.4. ECB Balance Sheet ( B) 3, 2,5 2, 1,5 1, 5 1999 23 27 211 14, 12, 1, 8, 6, 4, 2, Fig.5. and PBC Real Rates PBC Real Rates 2 22 24 26 28 21 212 4% 3% 2% 1% -1% -2% -3% -4% - 35, Fig.6. PBC Balance Sheet (CNY B) 3, 25, 2, 15, 1, 5, 23 25 27 29 211 213 1
Thousands Section I. Macro $16 $14 $12 $1 $8 $6 Fig.7. The Biggest 6 Central Bank Balance Sheets US, UK, Japan, China, EU & Switzerland (US$T) $4 26 27 28 29 21 211 212 213 $5 Fig.8. and M2 (US$B; Fed, ECB, PBC) $4 $3 M2 $2 $1 1999 23 27 211 $2, $1,5 $1, $5 2 2 1 1 Fig.9. US M1 YoY% - 197 198 199 2 21 2 1 1 Fig.11. ECB M1 YoY % 1999 21 23 25 27 29 211 213 4 Fig.13. PBC M1 YoY % 3 3 2 2 1 1 1996 2 24 28 212 1 Fig.1. US M2 YoY% 1 197 198 199 2 21 12% Fig.12. ECB M2 YoY % 1 8% 6% 4% 2% 1999 21 23 25 27 29 211 213 3 Fig.14. PBC M2 YoY % 3 2 2 1 1 1996 2 24 28 212 2
Section I. Macro $25 Fig.16. US National Debt ($T) Fig.15. Inflation US Euro Area China Headline CPI 1.2.9 3. Core CPI 1.7.9 n/a Shadowstats 8.8 n/a n/a, Shadow Government Statistics. As of 11/3/213 $2 $15 $1 $5 194 195 196 197 198 199 2 21 Source: TreasuryDirect.gov, USDebtClock.org 37 Fig.17. US Debt as % of GDP $18 Fig.18. The Debt Ceiling ($T) 32 $17 27 $16 22 $15 17 12 1947 1957 1967 1977 1987 1997 27 $14 Total Federal Debt Debt Ceiling Limit $13 211 212 213 214 7. 6. 6. 5. 5. 4. 4. 3. 3. 2. Fig.19. Average Annual Interest Rate on US Debt 2. 2 22 24 26 28 21 212 Source: US Treasury, Meridian Macro. 2 2 1 1 Fig.2. Interest Expense as % of Total Government Outlays 1989 1993 1997 21 ; US Treasury 25 29 213 3
Section I. Macro $1,9 Fig.21. Global Forex Accumulation (US$B, 12 month sum) $1,4 $9 $4 -$1 25 26 27 28 29 21 211 212 213 ; MacroMavens, LLC $7 Fig.22. Net Purchases of US Treasury Notes and Bonds by All Foreign Countries (US$B, 12 month sum) $5 $3 $1 1978 1983 1988 1993 1998 23 28 213 -$1 Source: US Treasury; MacroMavens, LLC $22 $18 Fig.23. China Net Purchases Long-Term US Securities (annual US$B) $14 $1 $6 $2 -$2199 1992 1994 1996 1998 2 22 24 26 28 21 212 Source: US Treasury; MacroMavens, LLC 4
Millions of Ounces Fig.24. Supply and Demand (tonnes) Supply Section II. 22 23 24 25 26 27 28 29 21 211 212 3Q13 Mine production 2,591 2,592 2,478 2,55 2,481 2,476 2,49 2,584 2,739 2,827 2,848 2,188 Old gold scrap 835 944 829 886 1,17 956 1,217 1,672 1,723 1,669 1,626 1,47 Traditional supply 3,426 3,536 3,37 3,436 3,588 3,432 3,626 4,257 4,463 4,495 4,473 3,235 Net producer hedging (412) (279) (445) (86) (373) (444) (349) (252) (18) 1 (2) (39) Official sector sales 545 617 497 662 367 484 236 3 - - - - Total supply 3,559 3,874 3,359 4,12 3,582 3,472 3,513 4,34 4,355 4,55 4,453 3,196 Demand Jewellery 2,68 2,522 2,673 2,77 2,283 2,45 2,187 1,76 2,17 1,972 1,98 1,645 Other 36 385 416 431 458 462 436 373 466 453 428 39 Total fabrication 3,4 2,97 3,89 3,138 2,741 2,867 2,623 2,134 2,483 2,425 2,336 1,954 Bar & coin retail investment 373 314 396 412 421 446 649 743 1,25 1,519 1,256 1,252 Official sector purchases - - - - - - - - 77 457 535 297 ETFs & similar 3 39 133 28 26 253 321 617 382 185 279 (697) Implied net investment 143 614 (259) 254 16 (94) (8) 541 27 (81) 47 39 Total demand 3,559 3,874 3,359 4,12 3,582 3,472 3,513 4,34 4,355 4,55 4,453 3,196 Source: World Council 25. 2. Fig.25. Market Cap of Above Ground as % of Total US Financial Assets 21.8% 19.6% 15. 1. 5.. 3.9% 1934 1982 3Q213 Source: Federal Reserve, World Council Fig.26. Held by ETFs 8 All ETFS SPDR Trust 4 Oct-3 Oct-5 Oct-7, Company Filings. Oct-9 Oct-11 Oct-13 5
Section II. Fig.27. SPDR Trust Ownership by Type Investment Adviser, 19.8 Broker, 9.9 Non- Institutional, 6.7 Private Banking, 3.1 Insurance Company,.2 Hedge Fund, 5.8 Mutual Fund, 3.2 Pension Fund,.4 Source: FactSet Fig.28. Notable Transaction in October 213 Country Tonnes Transaction Kazakhstan 2.4 Purchase Azerbaijan 2. Purchase Turkey 13. Addition Source: World Council 6 Fig.29. Central Banks Net Purchases (tonnes) 5 4 3 2 1 8 9 1 11 12-1 1 2 3 4 5 6 7 3Q -2 13-3 -4-5 -6 Source: World Council 34, 33,5 33, 32,5 32, 31,5 31, 3,5 3, Fig.3. Central Banks Holdings of (tonnes) 29,5 3/ 3/2 3/4 3/6 3/8 3/1 3/12 Source: World Council 14% Fig.31. as % of Total Reserves 13% 12% 11% 1 9% 8% 3/ 3/2 3/4 3/6 3/8 3/1 3/12 Source: World Council 6
1 Section II. Fig.32. Web searches for " Bubble" 8 6 4 2 26 27 28 Source: GoogleTrends 29 21 211 212 213 1 Fig.33. Web searches for " Investment" 8 6 4 2 25 26 27 28 29 21 211 212 213 214 Source: GoogleTrends 1 8 6 4 Fig.34. Bernstein's Daily Sentiment Index 2 DSI 26 27 28 29 21 211 212 213 Source Bloomberg, Bernstein's DSI 1 8 6 4 Fig.35. Market Vane Bullish Consensus Market Vane 2 26 27 28 29 21 211 212 213 Source Bloomberg, Market Vane $2, $1,8 $1,6 $1,4 $1,2 $1, $8 $6 $4 $2 $2, $1,8 $1,6 $1,4 $1,2 $1, $8 $6 $4 7
Millions of Ounces Section II. 2 18 16 14 12 1 Fig.36. Comex Futures Open Interest (tonnes) Open Interest 8 26 28 21 212 $2, $1,8 $1,6 $1,4 $1,2 $1, $8 $6 $4 $2 48 38 28 18 8 Fig.37. vs Continuous Commodity Index CCI Index -2 2 22 24 26 28 21 212 1, 8 6 4 2 Net Large Speculators Net Hedgers/Commercials Fig.38. Comex Futures Activity (tonnes) $2, $1,5 26-2 27 28 29 21 211 212 213-4 -6-8 -1, Source: CFTC $1, $5 1 8 6 4 Fig.39. Commercial Net Shorts as % of Total Open Interest More Net Short Net Short/Open Interest 2 Less Net Short 7/1 7/11 7/12 7/13 ; The McClellan Market Report $1,9 $1,7 $1,5 $1,3 $1,1 $9 $7 $5 6 5 4 3 2 1 Fig. 4. Registered COMEX Stocks vs. Owners per Ounce Registered Stocks Owners per Ounce 23 25 27 29 211 213 8 9 8 7 6 5 4 3 2 1
1H7 2H7 1H8 2H8 1H9 2H9 1H1 2H1 1H11 2H11 1H12 2H12 1H13 2H13 Section III. Mining Equities 7 6 5 Fig.41. XAU and HUI as a Ratio of HUI/ XAU/ 4 3 2 1 1995 1997 1999 Source: FactSet 21 23 25 27 29 211 213 $4, $3, $2, $1, -$1, -$2, -$3, Fig.42. Net Fund Flows For Lipper's Equity Precious Metals Fund Universe ($M) Source: Morningstar 2H13 - as of 11/3/13 $16 $14 $12 $1 $8 $6 $4 $2 Fig.43. Market Cap of Van Eck Equity ETFs ($B) 5/6 5/7 5/8 5/9 5/1 5/11 5/12 5/13 Source: FactSet $18 $16 $14 $12 $1 $8 $6 $4 $2 Fig.44. Equity Capital Issued by Miners $B of Equty Issued # of Transactions 1 2 3 4 5 6 7 8 9 1 11 12 13 Source: RBC Capital Markets 3 25 2 15 1 5 9
Millions Section III. Mining Equities 1 8% 6% 4% 2% Fig.45. Senior Producers Return On Capital $6 $5 $4 $3 $2 $1 Fig.46. Average Cost of Acquisitions in the Sector ($/Oz) 7 6 5 4 3 2 1-2% 2 3 4 5 6 7 8 9 1 11 12 13 Est. Source: FactSet. Universe: NEM, ABX, GG, KGC, AUY, NCM, AU, GFI, HMY 5 6 7 8 9 1 11 12 13 Acquisition Cost As Ratio of Price Source: RBC Capital Markets, Bloomberg. $1,8 $1,6 $1,4 $1,2 $1, $8 $6 $4 $2 Fig.47. Senior Producers Cash Costs and Margin ($/Oz) Cash Margin Cash Costs 22 23 24 25 26 27 28 29 21 211 212 3Q213 $2,5 Fig.48. Mining Industry Production Costs $2, $1,5 $1, $5 After Tax Cash Cost ($/oz) Margin (%) 21 22 23 24 25 26 27 28 29 21 211 212 213 E After Tax Cash Cost ($/oz) 29 21 253 311 363 413 552 738 661 814 987 1,1 1,27 1,137 Margin (%) 23% 32% 31% 24% 18% 32% 21% 1 32% 34% 37% 34% 19% 27% Source: Tocqueville Asset Management, FactSet. 214 E 1 4 3 3 2 2 1 1
Section III. Mining Equities Fig.49. Price Discounted by Market ($/Oz) Source: BMO Capital Markets Fig.5. NAV Premiums Senior & Intermediate Producers (N.A.) Source: BMO Capital Markets Fig.51. P/CF Universe of Coverage Average Fig.52. Adjusted Market Cap per Oz of Resource Divided by Price Source: Scotiabank Source: Scotiabank 11