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    Superfund Superfund Presentation Transcript

    • Superund Gold
    • 10 Reasons to be bullish about Gold 1) The Stimulus Effect The current US stimulus plan is pumping $12.8 trillion into the economy,according to Bloomberg. As the Globe & Mail reports flatly, “Many believe that the monetary stimulus efforts will cause a spike in inflation,” driving gold higher. 2) COMEX Traders Predict $1,600 Gold…by December If gold trades at or above $1,600 by December, some 100,000 call option contracts will be “in the money”. 3) “Big Money” Inflows If 2008, NYC-based hedge fund Paulson & Co’s flagship fund returned 37%, as the world markets burned. Paulson’s bullish on gold, big time, including the Mar. 17 purchase of 39.9 million shares of AngloGold, worth $1.28 billion. Other major hedge funds are piling into gold too, including Eton Park Capital, Greenlight Capital and Hayman Advisors. 4) China! China just revealed that it has doubled its gold holdings to 1,054 tons. Yet that still only equals 1.6% of its overall reserves. As China moves out of U.S. Treasuries into gold, this will help fuel the next leg of the run-up. 5) Demand Building across the Board Worldwide demand for gold jumped by $29.7 billion in the first quarter, a 36% bolt, according to the World Gold Council. Demand for gold ETFs (Exchange Traded Funds) rocketed 540% ...another trigger for the coming gold boom
    • 10 Reasons to be bullish about Gold 6) The Paper Dollar’s 30% Drop Since 2001, the U.S. Dollar Index has tanked 30%...while gold has risen 300%. With all the downward pressure on the dollar, and inflation on the way, this trend is about to pick up steam 7) Gold/Dow Ratio historically can go to 1 During major gold bull markets (and corresponding equity bears), gold and the Dow converge at a 1-to-1 ratio. During the last gold bull, the Dow sank to 850 and gold rose to $850. The Dow is now over 8,000…But even if it fell to 4,000, we could see $4,000 gold before this bull run is over! 8) U.S. Treasury Dept. Signals $5,468 Gold Currently, the U.S. government holds about 286.9 million ounces of gold. It has printed about $1,569 trillion worth of paper dollars. If each dollar were backed by gold, that would put the price at $5,468.80 an ounce. 9) Riding the “Commodity Super Cycle” Gold has a high correlation to commodities overall and we are still in the beginning phase of a commodity super cycle. 10) Historic Model Predicts $6,214 Gold During the last gold bull, the yellow metal ran from $35 an ounce to $850, a 24-fold increase. This bull started with gold at $255.95, meaning that if historic trends hold, the price target would be $6,214 an ounce.
    • Reasons to be bearish about Gold
    • Value of Gold over 600 years (in 1998 US Dollars)
    • Long Term Dow Jones Cycle
    • Dow to Gold ratio 30 year weekly chart (to 30/06/09)
    • Gold vs Swiss Francs 10 Year Weekly Chart (to 30/06/09)
    • Gold Facts Did you know that… … the total amount of gold that has ever been produced weighs 155,000 tons and is worth more than 4.8 trillion USD? That amounts to a price of 33,312 USD 155,000 4.8 per kilogram. … all the gold on earth could make up a cube with edges of 66 feet (20 meters)? … one ounce of gold (31.1 grams) can be extended to form a wire as long as 35 miles (56 kilometers)? … gold can be produced artificially by core meltdown processes, but the production is not economical due to high costs?
    • Gold Facts Did you know that… … a 22-karat gold bracelet weighing 12 ounces only gives you 11 ounces of pure gold? 155,000 4.8 … China is currently the largest producer and India is the largest consumer of Gold? … hundreds of pounds of rock needs to be unearthed to produce an ounce of gold? … the Gold Reserve Act in 1934 prohibited the private ownership of gold in the United States? … the price of gold hit a record of $1011 in March 2008? … the United States abandoned the “Gold Standard” in 1971, thus breaking the last tie between gold and circulating currency?
    • Gold as Currency
    • Why Invest in Gold? Safe haven Zero credit risk. Gold has always been a secure refuge in unsettled times, even though it bears some market risk. Gold has proven to be an effective wealth manager. Effective performance Gold delivers consistent returns within a wider portfolio of assets. Gold’s performs independently of most other investments and key economic indicators.
    • Arguments for an allocation to Gold In a Diversified Portfolio Include: Gold is a “safe haven” against inflation and financial crises. Gold often trades inversely to the U.S. dollar, making it a useful hedge in times of dollar depreciation. Gold can viewed as an alternative asset class. Gold, and even gold stocks, are not closely correlated to either the stock or bond markets.
    • Gold as a Safe Haven Gold is among only a handful of financial assets that is not matched by a liability. It provides ‘insurance’ against extreme movements in the value of traditional assets when markets are unsettled. In fact, over the past thirty years, the correlation between gold and the Dow Jones Industrial Average (DJIA) actually declined during the worst 30 months of the DJIA – showing that gold investors were protected when they needed it most. Source: World Gold Council
    • Gold as a Safe Haven There is a ‘flight to quality’ in volatile and uncertain times as investors seek to protect their capital by shifting into assets that are safer stores of value. Gold has attracted investors for centuries, protecting their wealth and providing a 'safe haven' in troubled or uncertain times.
    • Recent Examples of the Refuge Afforded by Gold: During the 1997/98 Asian Financial Crisis, the South Korean government offered its citizens local currency debt instruments in exchange for their gold holdings. South Korea raised over five million ounces of gold in this way, which enabled them to service their external debt and boost their country’s credit rating. Y2K caused a flight to gold in 1999 as investors feared the predicted electronic and communications meltdown. Japanese investors fled to gold in the first quarter of 2002 as they expected the withdrawal of government guarantees on bank deposits. Dollar demand for gold reached an all time high of $32 billion in the third quarter of 2008 as investors sought refuge from the global financial crisis.
    • Is Gold Really Reaching an All Time High? Jan. 21, 1980 Gold hits high of $ 850 Jan. 30, 2008 As inflation has picked up Apr. 2006 amid Islamic Revolution in Oct. 1987 and the stock market has Jan. 1983 Iran and Soviet invasion of Gold futures hit Gold futures tumbled, investors seeking Afghanistan Stock market record high Gold rises above cross $600 on a safe haven have piled crashes. Gold reaching $500 as interest rates dollar weakness, surpasses $500 $936.30 into gold, driving the metal fall, then falls $105 in geopolitical in December to all-time highs. the last 4 trading tensions over Aug. 15, 1971 days of February Iran’s nuclear Jan. 1989 1992 - 1996 19, 2003 program Mar. Nixon ends Gold Gold falls bellow Gold futures have risen Standart, priceU.S. 1999 / British Gold SummerDec. 2005 1975 - 1976 $500 suspending remains relatively invades coalition more than 48% in the last 2 convertibility of stable Iraq Sep. 2001 Goldto $250 Gold tumbles tops $500 years and was traded at a dollar into gold U.S. Treasury begins after Bank of England record of more than $1000 public sales of gold Investors turn to gold asplanned announced it in March 2008. stocks. IMF 5-years haven following terrorist to sell more than half gold sales program. atacks gold reserve its IMF auctions and lower inflation outlook To keep pace with inflation drive gold prices 2000 Jan. 17, 1991 Oct. 2002 going back to 1980, gold down Bull Market: Down hits futures would need to be Gold tumbles astop in January. Nasdaq, air End of bear phase of Gulf War and Wilshire 5000 market in stocks above $ 1,800 today begins S&P hit highs in March Source: Wall Street Journal
    • Gold as an Inflation Hedge
    • Gold can serve as a “Haven” in time of Crisis Gold experienced a fierce bull market in the ’70s as inflation accelerated Gold vs. CPI $600 100 90 $500 Gold (left scale) CPI 80 $400 70 $300 60 $200 50 $100 40 $0 30 Jan-70 Mar-71 May-72 Jul-73 Sep-74 Nov-75 Jan-77 Mar-78 May-79 Source: Superfund Data
    • Gold Performs Well During Fiscal Crises Gold's value as a safe haven can be illustrated by its behavior during periods of financial turmoil. Gold in Mexican Pesos 3500 3000 2500 2000 Mexico Crisis 1500 1000 500 Jan-91 Jan-92 Jan-93 Jan-94 Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jul-91 Jul-92 Jul-93 Jul-94 Jul-95 Jul-96 Jul-97 Jul-98 Jul-99 Source: Superfund Data
    • Gold Performs Well During Fiscal Crises Asian Crisis (represented by Thai experience) Gold in Thai Baht 18500 16500 14500 12500 Asian Crisis 10500 8500 6500 Jan-91 Jul-91 Jan-92 Jul-92 Jan-93 Jul-93 Jan-94 Jul-94 Jan-95 Jul-95 Jan-96 Jul-96 Jan-97 Jul-97 Jan-98 Jul-98 Jan-99 Jul-99 Source: Superfund Data
    • Gold Performs Well During Fiscal Crises Russian Crisis Gold in Russian Rubles 9100 8100 7100 6100 5100 Russian Crisis 4100 3100 2100 1100 100 Nov-93 Nov-94 Nov-95 Nov-96 Nov-97 Nov-98 Nov-99 Mar-94 Mar-95 Mar-96 Mar-97 Mar-98 Mar-99 Jul-93 Jul-94 Jul-95 Jul-96 Jul-97 Jul-98 Jul-99 Source: Superfund Data
    • Purchasing Power of Gold Source: Superfund Data
    • Maintaining Value in the Long Term Market cycles come and go, but gold has maintained its long term value. Jastram (1977) demonstrated that in the long run, in both inflationary and deflationary cycles, gold retains its purchasing power. The value of gold, in terms of real goods and services that it can buy, has remained remarkably stable. In contrast, the purchasing power of many currencies has declined. This is why gold is so popular: to counter the effects of inflation and currency fluctuations. Harmston (1998) concluded that over the long term, in spite of price fluctuations: Gold consistently reverts to its historic purchasing power parity (PPP) Gold has proven an effective preserver of wealth During periods of economic and social turmoil, gold has been a safe refuge for investors while the value of other assets plummet In the short run, the effectiveness of using gold as an inflation hedge varies, but in the long run it remains a reliable store of value (University of Sterling working paper, 2000).
    • Dollar Hedge Gold is widely considered to be a particularly effective hedge against fluctuations in the US dollar, the world's main trading currency.
    • Historical Volatility Assets with low volatility help to reduce overall portfolio risk. Volatility, or risk, is measured here as the extent to which asset prices fluctuate during a given period. This chart compares the volatility of gold with stocks between 1987 and 2007. The price volatility of gold is generally similar to blue-chip stock market index’s like the S&P 500. Gold prices usually rally when volatility increases. Gold is versatile. It can help manage a range of risks of concern to investors, including exposure to dollar fluctuations and unanticipated inflation. Gold’s longstanding history as a safe haven asset attracts investors around the world. Source: World Gold Council Data: Global Insight,WGC
    • Central Bank Transactions Central banks and other official institutions’ stocks of gold are currently 30,815 tonnes, or just under 20% of all the gold that has ever been mined. That’s the equivalent of just over 12 years’ new mine production at the current rate. Over the past decade a few central banks have sold gold in significant quantities (more than 100 tonnes); but most central banks are holding on to what they own. Gold remains a key reserve asset. In fact, some institutions are actively building up the level of gold in their reserves. What’s more, the Central Bank Gold Agreements of 1999 and 2004 have stabilized sales from 15 of the world’s biggest holders of gold at a rate that the signatories felt the market could absorb without undue disruption. Adding in other countries and institutions that have declared themselves non- sellers brings the total of official sector gold that will not come onto the market in regulated form to around 75%. Sales from outside this group amount to little more than a trickle, and are offset by purchases from other governments.
    • Liquidity and Ease of Trading Liquidity The gold market is a deep and liquid one in which trades can be executed 24 hours a day with the capacity to trade single transactions well in excess of $25M at a time, under normal market conditions. Ease of Trading Traditionally, access to the gold market has been through: Investment in physical gold, usually as gold coins or small bars, or, for larger quantities, by way of the over the counter market Gold futures and options Gold mining equities, often packaged in gold oriented mutual funds Exchange- Traded Funds (ETFs) and similar products, offering potential investors cost-efficient, easy access to gold through stock exchanges But more recently, new ways to invest in gold have come on stream for potential investors, providing cost-efficient, easy access through stock exchanges. Find out how to invest and where to buy.
    • Supp;y & Demand Rising Demand Limited Supply Increase in Investment Demand Annual gold production represents > ETF: holdings grew by more than only 1.5% of existing stocks of 260t (8.3 Moz) in January and the gold. first half of February 2009 alone. Increase in Gold Reserves > China Increased Gold Reserves Central Banks are selling less gold: 76% to Fifth-Largest holder in the world (2003-2009). > In 2008 official Increasing Jewellery demand sales of gold were from China and India: 42% lower from a year ago. > Jewellery demand amounted to US$54B > Official sales in 2007, making it fell to 8% of total one of the largest gold supply in categories of 2008 from 14% a consumer goods. year ago. > India accounted for 25% of global demand in 2007.
    • Portfolio Diversification While gold has shown strong returns over recent years, its most valuable contribution to a portfolio lies in the fact that it is relatively uncorrelated to equities, bonds and a large number of other asset classes Gold price is not driven by the same factor that drive the performance of other assets WHY?
    • Gold/Silver Ratio (1900-2008)
    • When Did Gold Appreciate? Historically, gold rose steadily when at least two of the following conditions were met: State Expanding a country’s money supply generally leads Intervention to to inflation, which results in the falling value of stimulate the paper money economy by printing money When the financial system is being questioned and Financial crises investors feel insecure about their investments Deficits increase when governments spend money to Risk of Default of stimulate their economies. Government bonds are the government debt basis for fixed-income investments in all countries, but are viewed cautiously when spending goes wild. An environment of When real interest rates are low or negative, gold’s Low or Negative popularity as a secure alternative investment increases (because the return on other low-risk assets is small or Interest Rates negative).
    • Quotes “…the general rule: a pure paper money that has practically no value as a commodity in itself.Such an arrangement has been the general rule only since President Richard M. Nixon ‘closed the gold window’ on August 15, 1971 – that is, terminated the obligation that the United States had assumed at Bretton Woods to convert dollars held by foreign monetary authorities into gold at the fixed price of $35 an ounce.Before 1971, every major currency from time immemorial had been linked directly or indirectly to a commodity.” ~ Milton Friedman (1994) “The dollar will go down. So the investor has to be very careful to be in assets that will actually appreciate in both foreign currency terms and in dollar terms. And if I look around the world, in my opinion, the most precious asset going forward will still be gold…” ~ Marc Faber (Nov 2008) “I own some gold and if gold goes down I’ll buy some more and if gold goes up I’ll buy some more. Gold during the course of the bull market, which has several more years to go, will go much higher.” ~ Jim Rogers (Dec 2008) “Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights.” ~ Alan Greenspan (1967)
    • Disclaimer This presentation has been prepared by Superfund Financial (Singapore) Pte Ltd for financial planners only and is not intended for general public distribution. The information contained herein is for educational purposes only. This presentation does not constitute either investment advice or an offer or an invitation to offer to acquire, dispose of, subscribe for or underwrite any of the securities described herein. All information and data contained herein was obtained through careful evaluation of information provided by reliable internal and external sources. However Superfund Financial (Singapore) Pte Ltd or any other members of the Superfund group of investment companies cannot guarantee the complete validity and accuracy of all figures as well as the illustrated graphs/diagrams. Performance results shown in this document are net of all fees. Past performance of the financial products contained in this presentation, especially performance figures of Superfund Q-AG (closed fund), Superfund GCT (closed fund) and Superfund Cayman (closed fund), are not indicative of future results for these or any other products. They exclusively serve as a historical presentation of the performance of their respective trading managers and of certain members of the Superfund Group. No subscriptions or follow-up subscriptions from existing investors are possible or will be accepted in closed funds. Fee structures of open Superfund funds may differ from those of closed Superfund funds identified herein, in which event the future performance of such open funds will likewise differ from said closed funds. Financial products managed by members of the Superfund group of affiliated investment companies are speculative investments. There is a substantial risk of loss in trading futures and options. Every capital investment contains risks. The value of an investment may fall as well as rise.
    • Disclaimer Some performance results indicated herein represent simulated results based on historical data, and not the results of actual trading. The simulated performance of Superfund Gold A strategy is based first on the actual past performance of Superfund Q-AG (closed fund) since 1996, which is denominated in EUR. This performance has then been valorized based on the actual performance of gold (in USD/ounce) on the London Metal Exchange on the respective valuation dates for Superfund Q-AG (the last banking day of each month). Superfund Gold A strategy, however, did not yet exist during the time period cited. Your attention is specifically drawn to the fact that this simulated performance is based on the price of gold in USD and that fluctuations during this time in the USD/EUR exchange rate have not been considered or included in the simulated performance. The simulated performance results are provided for informational purposes only to indicate historical performance had the new product strategies been available over the relevant period. No representation is being made that any investment will or is likely to achieve results similar to those shown. Past and simulated performance is not indicative of future results. Although the simulation includes adjustments for certain fees payable by the new strategies, the simulated performance results may vary once actual fees are taken into account. Hypothetical performance results have many inherent limitations. No representation is being made that any investment will or is likely to achieve profits or losses similar to those shown. THE AUTHOR AND DISTRIBUTORS OF THIS MATERIAL EXPRESSLY DISCLAIM ANY AND ALL LIABILITY FOR ANY INACCURACIES CONTAINED IN THIS DOCUMENT, AND SHALL NOT BE HELD LIABLE FOR THE SAME.