Precious Metals Industry

David Cramer, Nicole Fleischman, Carson Foust & Henry Frobose

Background of Precious Metals

First used by Egyptians, Sumerians, Greeks, Athenians and Romans

1492- Columbus came to America and found gold

1838- Remove Cherokee Indians to Oklahoma

1849- California Gold Rush Forty-niners Panning

Gold became a medium of exchange

Background of Precious Metals

1920s- U.S. was economically booming

1929- Great Depression1933- President Franklin Roosevelt

wrote an executive order taking all but $100 of U.S. citizen’s goldIncreased the value of gold by 75

percent

Gold’s Average Price

Year Approximate Price Per Troy Ounce1800s- 1920s $18.951920s $20.001930s $34.001940s $33.501950s $34.501960s $35.00*1970s $36.00-$306.00*1980s $350.001990s $350.002000s $300.00-$800.00*

*Denotes rapid price fluctuation throughout those years.

Uses of Gold

Currency, investmentCoins, gold bullion

Jewelry, AwardsDental work, medical uses

Crowns, bridgesElectronics

Cell phones, computers, TVs

Uses of Silver

Currency Jewelry and awardsSilverwareMedicineElectronics

High conductivity, lower price than gold

Copper

Third most-used industrial metalUsed for wiring and plumbing

Wires, pipes, roofingGood conductor, resistant to

corrosion

Iron and Steel

Iron and Steel make up 95% of all metal produced annually by weight

Least expensive industrial metalStrongest industrial metalAutomobiles, tools, machines,

bridges, fastenersCan be made corrosion-resistant by

adding chromium, nickel, tungsten

Aluminum

The earth’s second most abundant metal

Resistant to corrosion, light weight

Used in airplanes, automobiles, bicycles, pop cans, foil

Highly recycled because of its valuable properties

Other metals

PlatinumOften added to gold or silver in

jewelryUsed in catalytic converters in carsCathodic protection systems

UraniumUsed for nuclear power reactors,

nuclear weapons, armor, ammunition

What are some companies within the

precious metal industry?

Kay Jewelers

Founded in 1916 by Sol and Edmund Kaufmann

Reading, Pennsylvania Three big metals:

Platinum, Gold and Silver “Every kiss begins with Kay” “Although product offerings have

changed through the years, shopping at Kay has remained a valued tradition.”

U.S. Steel

Founded in 1901 by Andrew Carnegie, J.P. Morgan, Charles Schwab and Elbert H. Gary

Pittsburgh, Pennsylvania Big Metal:

Steel “In response to economic changes in the steel

industry, the corporation reduced its domestic raw steel production capability through a number of restructurings. In addition, the corporation entered into several steel joint ventures with both domestic and foreign partners.”

U.S. Steel

2001- tax-free spin off of the steel and steel related businesses into a freestanding, publicly traded company known as United States Steel Company

Metals USA

Founded in 1996 Houston, TexasBig Metals:

Aluminum, Steel and specialty metals

Three Groups:Plates and Shapes GroupFlat-Rolled GroupBuilding Project Group

Gold Bubble Burst

False security of investment with gold

Factors:State of the U.S economy and the U.S.

dollar value Amount of Investors

Gold Bubble Burst Con’t

When if ever should you invest in gold?

Industrial Metal Burst Cont’d

Year Approximate Price Per Troy Ounce1800s- 1920s $18.951920s $20.001930s $34.001940s $33.501950s $34.501960s $35.00*1970s $36.00-$306.00*1980s $350.001990s $350.002000s $300.00-$800.00*

*Denotes rapid price fluctuation throughout those years.

Industrial Metal Burst

FactorsThe Chinese Economy

The relationship between supply and demand

The Value of Precious Metals in 2010

Type of Precious Metal Approximate Price Per Troy Ounce

Platinum $1503.00

Gold $1079.00

Palladium $416.00

Silver $15.27

Nickel $.36*

Copper $.11*

*Denotes the value of precious metals in 2009.

Investments and the Precious Metal Bubble

Low Interest Rates for Savings Accounts

Many Americans see safety in Precious Metal Investments because of its recent steady increase rather than investment in other Companies in the Stock Market

Many Americans do not have enough diversity in their investments

Inflation and Precious Metal Market

Historically the value of gold reaches it higher values when the value of a dollar is low and Inflation is high

The value of a dollar continues to fall

What about high inflation?

Currently Inflation is not a problem, however after the recession in 2009 the scare is Inflation will start to rise.

One way to prevent this precious metal bubble will be to control inflation

Other Effects of a Bursting Bubble

Jewelry Market Housing Market

Build Materials Electrical WiringMany other markets effected if

people lose there savings

Look back to the Past . . .

In 1980 there was a sharp correction or “burst” in the Gold market. The price of Gold had been rising for years when the price was cut in half.

The weakening of the US dollar as well as inflation contributed to this downfall.

Prediction for the Future . . .

Many precious metal values continue to rise

The value of the US dollar is decreasing

Inflation? With inflation adjustment the value

of an ounce of Gold would need to be over $2000 in order to compare to !980

Final Thought

If inflation is not kept under control in the next few years the value of precious metals will continue to increase and then it is inevitable that the precious metal “Bubble” will Burst!

Fun Facts ~ Gold

What occupation has used gold since 700 B.C.?

What government agency uses a large quantity of gold because of it’s conductive capabilities?

Raise your hand if you have something gold on you right now.

Questions??