2. Gold supply

Supply summary

• Gold Global Supply 4,214 tons• Decline due to 6% recycled gold drop • Central Banks changed from net sellers to

net buyers over the last 3 years.• Stock-to-flow ratio: 60 (Total reserve of

gold/annual production).• Newly gold production increased by

5,37%• Scrap production decreased by 13,8%

2. Gold demand

Demand summary

• Gold Global Demand 4,501 tons• Global Turmoil- Gold prices on all

time high & Gold demand for ETF´s doubled

• 41% of demand from India & China• Investment demand remains strong

2. Gold reserves & price evolution

• Collapse of the US dollar• Gold returning to historic role as

money• No other world currency offer refuge• Massive deficits resulting in hyper-

inflation

• Investmend demand for gold rapidly rising

• Gold is an established powerful bull market

• Relatively smaller size of the gold market• Large short position (speculation)

2. Largest gold producing firms

• Overall production expected to decrease for the top 10 firms in 2013

• Reduction in exploration has resulted in fewer mine discoveries what affects the reserve replacements of companies

• High cost increases makes less attractive mines funding for the gold producing firms

5. Precious metals and monetary policy• In times of massive money supply increase gold serves as a money storer of wealth and inflation

hedge

• Loose monetary policy weakens the dollar which boost precious metals even more (devaluing money leads consequently to an appreciation of the value of gold)

• QE1 and QE2: Negative correlation between money supply increase and gold price development (in 3 yrs. gold price doubled, silver tripled)

• “QE” de-value dollar while driving up gold prices (as the Fed prints more dollars, each dollar loses some value therefore buy fewer ounces of gold)

5. Precious metals and monetary policy• What happened in QE3??? QE not the only factor

influencing gold price but also supply and demand; investors possibly consider the all time high was already reached and with an expansionary policy stock markets inflate and a creation of a bubble seem in favor

• What will happen if QE3 ends? Flight to quality of gold again?

• Gold and silver remained among the best-performing asset classes since 2000

Precious metals and Monetary Policy

• Gold:– Inverse relationship between Gold and US monetary policy.– If interest rates Gold price

5. Precious metals and monetary policy

Precious metals and asset allocation