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Precious metals market analysis and outlook …

Precious metals market analysis and outlook

Price trends for gold and precious metals in an era of economic uncertainty
From central banks to private investors? Who’s buying gold, how much and why?
Physical gold, ETFs or mining stocks: Assessing the most profitable way to gain exposure to rising prices
Exploring emerging gold projects: Strategies for picking a winning gold stock

Philip Klapwijk, Global Head of Metals Analytics, Thomson Reuters GFMS

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  • 1. PRECIOUS METALSMARKET OUTLOOK PHILIP KLAPWIJK GLOBAL HEAD OF METALS ANALYTICSMines & Money Hong Kong Conference 20th March 2012
  • 2. THOMSON REUTERS GFMS• The world’s leading provider of fundamental research on the precious metals markets.• Longstanding commitment to the markets: Annual ‘Gold Survey’ produced since 1967.• Unique ‘Bottom Up’ methodology (our analysts visit > 50 countries p.a.) as well as thorough ‘Top Down’ research.• Exclusive and highly detailed proprietary supply/demand data sets.• GFMS acquired in August 2011 by Thomson Reuters as a platform for expanding the group’s research and data services in precious and base metals.• Thomson Reuters GFMS offers a wide variety of research products, including short, medium and long term forecasts on precious and base metals.• For more information please contact charles.demeester@thomsonreuters.com
  • 3. PRECIOUS METALS PRICES SINCE 2001 Source: Thomson Reuters GFMS
  • 4. PRECIOUS METALS PRICES IN 2012 Source: Thomson Reuters GFMS
  • 5. PHYSICAL PRECIOUS METALS MARKETS: VALUE OF TOTAL DEMAND IN 2011 Value of Total Demand in 2011 = $280.9 billion Source: Thomson Reuters GFMS
  • 6. NET INVESTMENT INFLOWS INTO PRECIOUS METALS MARKET IN 2011Net Investment Inflows into Precious Metals Market in 2011 = $92.2 billion Source: Thomson Reuters GFMS
  • 7. ECONOMIC BACKDROP IN 2012 – BASE CASE• Slowdown in world GDP growth to 2.3% annual rate. Downturn in both OECD and most EMs. Deceleration in global industrial production more marked.• USD generally stronger this year, e.g. forecast average USD/EUR of 1.28.• Eurozone debt crisis continues in 2012, with only slow progress towards resolution. However, a break-up of the single currency is avoided.• Short-term interest rates in nearly all major economies remain at ultra-low levels throughout 2012 and at close to zero if not negative in real terms.• Fed eventually enacts further monetary stimulus; ECB takes additional measures to deal with sovereign debt and banking crisis in Europe. Monetary policy loosened in key EMs.• Inflation rates in most of the developed world remain low but inflation expectations are raised by central banks’ monetary easing and debt monetisation.
  • 8. GOLD
  • 9. US DOLLAR GOLD PRICE US$/ozUS$/oz Average YoY Intra-period2010 1,224.52 25.9% 25.3%2011 1,571.64 28.3% 10.3%Jan- 16th Mar 1,695.58 23.1% 3.8%2012 200-day moving average Source: Thomson Reuters GFMS
  • 10. GOLD TOTAL SUPPLY Source: Thomson Reuters GFMS
  • 11. FABRICATION DEMAND Source: Thomson Reuters GFMS
  • 12. GOLD SUPPLY & FABRICATION DEMAND Supply (mine production + scrap) Fabrication (excluding coins) Source: Thomson Reuters GFMS
  • 13. WORLD INVESTMENT Value Source: Thomson Reuters GFMS
  • 14. NET OFFICIAL SECTOR SALES/PURCHASES Net Sales Net Purchases Source: Thomson Reuters GFMS
  • 15. OUTSTANDING DELTA ADJUSTED PRODUCERS HEDGE POSITION Source: Thomson Reuters GFMS
  • 16. 2012 GOLD PRICE FORECAST High $2005 Average $1778 Low $1580 Source: Thomson Reuters GFMS
  • 17. SILVER
  • 18. US DOLLAR SILVER PRICEUS$/oz Average YoY Intra-period2010 20.19 37.6% 78.4%2011 35.12 73.9% -8.1%Jan-16th Mar 32.71 6.0% 12.1%2012 Source: Thomson Reuters GFMS
  • 19. GOLD:SILVER RATIO AND SILVER PRICE (MONTHLY AVERAGES)
  • 20. SILVER TOTAL SUPPLY Source: Thomson Reuters GFMS
  • 21. SILVER FABRICATION DEMAND Source: Thomson Reuters GFMS
  • 22. GROWING SILVER MARKET “SURPLUS” SUPPLY (mine production + scrap) DEMAND (fabrication excluding coins) Source: Thomson Reuters GFMS
  • 23. SILVER WORLD INVESTMENT Value Source: Thomson Reuters GFMS
  • 24. 2012 SILVER PRICE FORECAST High $45.05 Average $34.35 Low $26.85 Source: Thomson Reuters GFMS
  • 25. PLATINUM
  • 26. US DOLLAR PLATINUM PRICEUS$/oz Average YoY Intra-period2010 1,609.39 33.7% 17.0%2011 1,721.87 7.0% -22.8%Jan-16th Mar 1,600.85 -11.3% 19.3%2012 Source: Thomson Reuters GFMS
  • 27. PLATINUM-GOLD PREMIUM/DISCOUNT (weekly averages) * Calculated using 60-day rolling correlations Source: Thomson Reuters GFMS
  • 28. PLATINUM TOTAL SUPPLYTonnes Source: Thomson Reuters GFMS
  • 29. PLATINUM FABRICATION DEMANDTonnes Source: Thomson Reuters GFMS
  • 30. AUTOCATALYST DEMAND vs VEHICLES PRODUCTION Source: Thomson Reuters GFMS
  • 31. PLATINUM MARKET IN LARGE GROSS “SURPLUS” Supply (Mine Production + Scrap) Fabrication Demand Source: Thomson Reuters GFMS
  • 32. PLATINUM INVESTMENT – ETFs & Futures
  • 33. 2012 PLATINUM PRICE FORECAST High $1,885 Average $1,620 Low $1,405 Source: Thomson Reuters GFMS
  • 34. PALLADIUM
  • 35. US DOLLAR PALLADIUM PRICEUS$/oz Average YoY Intra-period2010 525.48 99.6% 89.3%2011 732.88 39.5% -18.9%Jan-16th Mar 684.61 -14.5% 5.9%2012 Source: Thomson Reuters GFMS
  • 36. PALLADIUM’S CORRELATION WITH PLATINUM * Calculated using 60-day rolling correlations Source: Thomson Reuters GFMS
  • 37. PALLADIUM TOTAL SUPPLYTonnes Source: Thomson Reuters GFMS
  • 38. PALLADIUM FABRICATION DEMANDTonnes Source: Thomson Reuters GFMS
  • 39. PALLADIUM MARKET IN SMALL GROSS “DEFICIT“ Fabrication Demand Supply (Mine Production + Scrap) Source: Thomson Reuters GFMS
  • 40. PALLADIUM INVESTMENT – ETFs & futures
  • 41. PLATINUM AND PALLADIUM ABOVE GROUND STOCKSA useful explanation why platinum costs more than palladiumAs stock levels converge, so too over time should prices.
  • 42. 2012 PALLADIUM PRICE FORECAST High $860 Average $735 Low $590 Source: Thomson Reuters GFMS
  • 43. DISCLAIMERThe information and opinions contained in this presentation have been obtainedfrom sources believed to be reliable, but no representation, guarantee, conditionor warranty, express or implied, is made that such information is accurate orcomplete and it should not be relied upon as such. Accordingly, Reuters Ltdaccepts no liability whatsoever to the people or organizations attending thispresentation, or to any third party, in connection with the information contained in,or any opinion set out or inferred or implied in, this presentation. This presentationdoes not purport to make any recommendation or provide investment advice tothe effect that any precious metals related transaction is appropriate for allinvestment objectives, financial situations or particular needs. Prior to making anyinvestment decisions investors should seek advice from their advisers on whetherany part of this presentation is appropriate to their specific circumstances. Thispresentation is not, and should not be construed as, an offer or solicitation to buyor sell precious metals or any precious metals related products. Expressions ofopinion are those of Reuters Ltd only and are subject to change without notice.