AIS Capital Management LLC
Gold Strategy Presentation
For Presentation in Calendar Year 2010
AIS CAPITAL MANAGEMENT LLC
A Registered Investment Advisor
187 Danbury Road, Suite 201
Wilton, Connecticut 06897
(203) 563-1180 firstname.lastname@example.org
Definitions and Disclaimers
Gold, Gold Bullion, Dollar Index, Government Bonds: The spot market price.
(Source: CSI Data)
Price Ratio: The spot market price of one market divided by the spot market price of
Any decision to invest in any AIS product must be made solely on the information
provided in the necessary documents to effect the transaction which will be provided
upon request. All of the material presented here is either historical fact or AIS’s opinion
of the future. As such, any characteristic of AIS products portrayed on an individual
basis or in combinations with other AIS products or other more common traditional
investments, including the ability of AIS products to mitigate volatility, declines in
account value, or even make positive returns are historically based and may or may not
continue into the future. One must invest in AIS products with the knowledge that any
opinion presented is just that, an opinion of AIS and not a statement of fact. AIS is
confident about its research and ability to continue to add investment value going
forward and its principals back this belief by having sizable personal investments in AIS
products, however, markets continually change and the ability for AIS to add value going
forward is uncertain. In fact, it is possible that an investor may lose all of his or her
investment in any AIS product either gradually or suddenly. Past performance is not
necessarily indicative of future results.
The material presented here is only relevant when combined with the “Definitions and Disclaimers” page included in this presentation.
AIS Capital Management 4
AIS Gold Net Returns 5
AIS Gold Strategy 6
AIS Gold Strategy Equity Selection Process 7-9
Declining World Gold Supply 10-13
Economic Environment :Why Gold Now? 14-23
AIS Capital Management, LLC
Registered Investment Advisor (1992)
AIS Gold Fund LP
Investment Structure Available:
The material presented here is only relevant when combined with the “Definitions and Disclaimers” page included in this presentation. 4
AIS Gold Strategy
Performance Net of All Fees
Yearly Return (%)
62.4% 67.4% 67.8%
2003 2004 2005 2006 2007 2008 2009
Compound Annual Return - 3 yr 6%
Compound Annual Return - 5 yr 27%
Annualized (since inception 12/31/2002) 26%
The material presented here is only relevant when combined with the “Definitions and Disclaimers” page included in this presentation. 5
AIS Gold Strategy
Outperform U.S. gold equity indexes and gold bullion
Use leverage by combining futures positions and equity positions
Ability to be long or short precious metals futures
Invest in individual mining companies
Protect assets during gold market declines by being flat or short
To outpace inflation and avoid dilution of wealth
Rising market: long futures and equities, leverage available, no hedges
Declining market: hedges in excess of positions creating short exposure
The material presented here is only relevant when combined with the “Definitions and Disclaimers” page included in this presentation. 6
AIS Gold Strategy: Equity Selection
Equity Selection Process:
Fundamental selection of individual companies
Screen universe of mining companies for minimal hedge activity
Select companies based on numerous criteria including size, quality
and location of reserves among other factors
Adjust holdings between companies as relative valuations shift
Discretion to choose net exposure through use of hedges
Portfolio exposure ranges from 300% net long to 100% net short
The material presented here is only relevant when combined with the “Definitions and Disclaimers” page included in this presentation. 7
Opportunities in Gold Research
Bottom-up, fundamental research is critical
AIS focuses solely on companies (among other variables):
In “safe haven” areas
In mining-friendly jurisdictions
With higher-grade deposits
Who do not hedge production
With low production costs per ounce, to maximize cash flow
Portfolio companies must have attractive valuations
Majors Range AIS At Purchase
Enterprise Value To Company $200-$500+ $40-$200
Reserves & Resources
Declining World Gold Supply
The number of major gold discoveries made per year
New finds are significantly smaller than earlier ones
Average gold grade of these discoveries has declined,
and is now half of what it was in 1980
In addition to this decline in discovery quality, overall
productivity is slipping: global mine production has
been steadily dropping since 2001
Declining World Supply
from Mine Production
I II III
most likely scenario going forward
Low/declining inflation Deflation/liquidity trap Quantitative Easing Creates Distortions
Strong economic growth Economic contraction Depreciating currency
Accelerating raw material prices
Profit margins under pressure
Examples: Examples: Examples:
U.S. 1950-1965 U.S. 1930s U.S. 1970s
1982-2000 Japan 1990s Germany 1920s
Japan: 1970-1989 Argentina 2000s
Characteristics: Characteristics: Characteristics:
Expanding profit margins. Profits non-existent. Operating profits squeezed by costs.
Expanding P/E ratios. Financial defaults. Rising physical asset value.
Declining interest rates. Preference for liquidity. Hoarding and inventory profits common.
Leveraged reward. Balance sheet de-leveraging. Leverage rewarded, but cash flows less certain.
Strong dollar. Shrinking P/E ratios.
Investment opportunities: Investment opportunities: Investment opportunities:
Equities Cash Select equities (pricing power)
Long-term bonds High quality bonds Gold
Leveraged buy-outs Short selling Physical commodities
Venture capital Select short selling:
Equities w/limited pricing power.
The material presented here is only relevant when combined with the “Definitions and Disclaimer” page included in this presentation. 14
Chart courtesy of AIS Futures Management LLC
Data Source: Federal Reserve Bank of St. Louis
(Not Seasonally Adjusted) Through 12/31/2009
Adjusted Monetary Base
The Impact of Government on Inflation
Producer Prices (1720- December 2009)
Prior to 1951, price inflation occurred during
wars and other times of shortage. After the
event ended, prices deflated back to where
they had been. Since 1951, our government
has fought deflation at the cost of inflation.
March 31, 1951
The material presented here is only relevant when combined with the “Definitions and Disclaimers” page included in this presentation. 16
Gold Priced in Euros
Data Through 12/31/09
1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009
From 2001 – 2004 gold’s price strength was primarily tied to dollar weakness. However, since 2005 gold has been
strong versus all major currencies. This may be signaling a more difficult environment for all financial assets.
The material presented here is only relevant when combined with the “Definitions and Disclaimers” page included in this presentation. 17
Ratio Chart: Gold Bullion / U.S. Treasury Bond
3/20/1968 – 12/31/2009
1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
The material presented here is only relevant when combined with the “Definitions and Disclaimers” page included in this presentation. 18
Gold / S&P 500 Index
Through December 31, 2009
Gold / S&P500 Index 1.55 Rising Relative Price
to 12/31/09 (Gold Outperforms)
1999 2001 2003 2005 2007 2009
1968 1972 1976 1980 1984 1988 1992 1996 2000 2004 2008 2012
The material presented here is only relevant when combined with the “Definitions and Disclaimers” page included in this presentation. 19
U.S. Gold Reserves versus Federal and Agency Debt
Held by Foreigners
Fed Debt HBF Agency/GSE HBF US Gold Res in $ US Gld % DHBF
World Official Gold Reserves Relative to World
Band (Dashed Lines): Uses World Official Reserves at Market
Prices (1971-1980) Relative to World Currency Reserves.
Band after 1980 Indicates Price Level of Gold Necessary to
Support Foreign Currency Reserves, if 1971-1980
10,000 Relationship Reestablished.
U.S. Treasury Gold Value Relative to Foreign Held
U.S. Government Debt
Band (Dashed Lines): Uses U.S. Treasury Gold Holdings at
Market Prices (1971-1980) Relative to Total U.S. Government
Debt Held by Foreigners. Band after 1980 Indicates Price
Level of Gold Necessary to Support Foreign Held Debt, if
10,000 1971-1980 Relationship Reestablished.
Gold Strategy Summary
Investment in Gold and Silver Equities and Futures
Exposure Ranges From 100% Short to 300% Long
Real Added Value in Equity Selection
Still In Early Stages of Gold’s Bull Market
The material presented here is only relevant when combined with the “Definitions and Disclaimers” page included in this presentation. 24
John R. Hummel, Partner, President and CIO , has 40 years of investment experience. Prior to the formation of AIS, Mr. Hummel was a partner of Cowen &
Co.(1990-1993) where he managed equity, balanced, and fixed income portfolios for the Asset Management Division, a partner of Matuschka &
Co.(1987-1990), and a managing director of Mitchell Hutchins Asset Management (1977-1987), where he managed equity, balanced and fixed income
portfolios for Fortune 500 retirement plans, the Federal Reserve retirement plan and high net worth individuals. Mr. Hummel holds a B.S. degree in
Investment Management from Northwestern University(1967) and serves on the boards of the North Atlantic region of Young Life, and Tyndale
Bradley C. Stern, Partner, Portfolio Risk Manager and CCO has 19 years experience in investments with emphasis in statistics and capital markets theory.
Prior to the formation of AIS, Mr. Stern worked with Mr. Hummel at Cowen & Co. in the asset management department. Mr. Stern holds a B.B.A.
from Emory University(1988).
Robert F. Ward, Partner, Portfolio Manager, has 29 years of investment consulting and investment experience. Prior to joining AIS he was a Senior Vice-
President, Investments with Morgan Stanley (2000-2005), Paine Webber (1988-2000), and Kidder Peabody, Inc. (1983-1988). His business
relationship with AIS and John Hummel has spanned over two decades. Bob holds a B.A. in History from Metropolitan State College.
Nancy Stuebe, Partner, PM / Equity Analyst, has 23 years of investment experience. Prior to joining AIS she was an Analyst at Gabelli Asset Management.
Ms. Stuebe was also an analyst at Weiss, Peck & Greer and Advent Capital Management. Ms. Stuebe holds a B.A. in Economics and English form
Wellesley College (1985) and an M.B.A. from Columbia University.
Michael J. Benenson, Partner, Director of Sales and Marketing, has 24 years of experience in the securities industry. Prior to joining AIS he was Chief
Operating Officer of P.A.W. Capital Partners, advisor for several long/short hedge funds. Mr. Benenson was an Executive Managing Director and
Head of US Equity Sales for GKM/Harris Nesbitt (a division of the Bank of Montreal). Prior to his 10 years at GKM/Harris Nesbitt, Mr. Benenson
spent 10 years as a Senior Vice President of institutional sales at Lazard Freres & Company. Mr. Benenson holds a B.A. from Dartmouth College
Linna Ru, Partner, CFO, has 25 years of experience in computer programming and analysis. Before joining AIS, Mrs. Ru was a computer programmer for
Texlnnova Company. Mrs. Ru holds a M.S. in Computer Science from WuHan University (1985) and a M.S. in Applied Mathematics from Toledo
Roger A. Wilkin, Partner, Client Services, has 36 years experience in both corporate and non-profit organizations. Prior to joining AIS, Mr. Wilkin served
as National Director of Development and as Regional Director of the New York metropolitan area for Young Life. Prior to that he was with AT&T
Bell Laboratories from 1969-81. Mr. Wilkin holds a B.S. in electrical engineering (Magna Cum Laude) Union College, Masters in Operations
Research, Cornell University, and Masters of Divinity, New Brunswick Reformed Seminary.
The material presented here is only relevant when combined with the “Definitions and Disclaimers” page included in this presentation. 25
Robert A. Barbieri, Partner, CAO, has 37 years of investment management experience. Prior to joining AIS, he was a vice president for Wright
Investors’ Service performing economic and securities analysis and product development while supervising composite performance accuracy
and compliance. He received a B.A. from Southern Connecticut State University and is a member of the Hartford Society of Security Analysts
(HSSA) and the Association for Investment Management and Research (AIMR).
Jennifer Stanley, Investment Consultant, has more than 11 years of investment marketing experience. Prior to joining AIS, Ms. Stanley was a
financial consultant for a brokerage firm in the Virgin Islands. Her experience also includes management of marketing and client services for a
systematic CTA and marketing for a large mutual fund firm. Jennifer holds a BA in Journalism from the University of New Hampshire (1988).
Pallavi Moorthy, Programming and Operational Support, has 8 years experience in web design, programming, and market research. She managed an
inventory management trading system for IBM and has done web development at AT&T. Ms. Moorthy has an MBA in Marketing and Finance
from Pace University (2005), an MIS degree from Pace University (2002) and a BA from Smith College (2001).
Jarvis R. Roque, Controller,, graduated from The Pennsylvania State University, Smeal College of Business with a B.S. in Accounting and Finance
in 2006 where he earned Dean's List honors. Prior to AIS, he received leadership training through the LIFT Discipleship Program, NY (2007)
and served as Assistant Recruiter at New England Wealth Strategies (MetLife affiliate), NY (2004).
Lu-Ann Roth, IT and Administration, has 18 years of corporate experience beginning with administrative support and ending with over 10 years of
information technology management . Prior to joining AIS, Mrs. Roth spent 15 years with GE Capital Corp where she provided leadership in
information technology and LAN management.
Marie Constantino, Administrative Operations, holds a B.A. in Political Science and is a Certified, Licensed Real Estate Salesperson,. As well she
possesses multiple interdisciplinary certifications and diplomas, including in Web Design & Development. She is active in her community,
having served as Justice of the Peace, Conservation / Inland / Wetlands Commissioner, and Founding Commissioner of a Town Housing
Partnership / Affordable Housing Committee.
Arthur F. Bell, Jr & Associates, L.L.C.
McGladrey & Pullen CPA
Marcal Systems (Offshore Administrator)
Attorney: Sidley Austin LLP
The material presented here is only relevant when combined with the “Definitions and Disclaimers” page included in this presentation. 26