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7/30/2019 The Perfect Gold Storm
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The Perfect Gold Storm
Presented by Pierre Lassonde| Tuesday October 23rd, 2012
Grants Interest Rate Observer Conference, New York
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A gold bull market brings a production response...
2Pierre Lassonde | The Perfect Gold Storm | 23 October, 2012
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OOPS! Not this t ime
3
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
TSX Gold Index / Gold ($USD)
TSX GOLD/GOLD(US$)
13 week moving avg
52 week moving avg
Pierre Lassonde | The Perfect Gold Storm | 23 October, 2012
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New finds are proving increasingly elusive...
4
Represents 189 gold deposits discovered since 1990, each with at least 2m oz of gold in total reserves, resourcesand past production (or at least 1m oz in reserves)
Data sources: Metals Economics Group Strategies for Gold Reserves Replacement 2012
Pierre Lassonde | The Perfect Gold Storm | 23 October, 2012
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Its all about grade...or lack of it
5Pierre Lassonde | The Perfect Gold Storm | 23 October, 2012
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Resource nationalism is polarising production...
6Pierre Lassonde | The Perfect Gold Storm | 23 October, 2012
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New finds are taking longer to bring to market...
7
Data sources: Metals Economics Group Strategies for Gold Reserves Replacement 2012
Pierre Lassonde | The Perfect Gold Storm | 23 October, 2012
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Analysts: Perfectly wrong forecasts
8Pierre Lassonde | The Perfect Gold Storm | 23 October, 2012
Oil price: Costs proxy Gold price: Revenue proxy
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Dead cat bounce or ninth life
9Pierre Lassonde | The Perfect Gold Storm | 23 October, 2012
Cut-off grades reaching limits of current technologies
Energy (25%) & labor (40%) could provide stability
Capex still a wild card (location, labor productivity)
Consensus price forecast reality
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Yearly gold supply 2001 & 2011
10Pierre Lassonde | The Perfect Gold Storm | 23 October, 2012
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All the gold in the world! 171,300 tonnes
11
Jewellery 50%
Private
Investment
19%
Central
Banks
17%
Tech
12%
Unaccounted
2%
Value @ $1,700/oz =US$ 9.3 Trillion
~0.78 oz/person on the planet (assuming 7 B people)
~1 part/billion in earths crust
Pierre Lassonde | The Perfect Gold Storm | 23 October, 2012
68
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Demand continues to expand and broaden...
12Pierre Lassonde | The Perfect Gold Storm | 23 October, 2012
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Central banks return as net buyers after 20 years...
13Pierre Lassonde | The Perfect Gold Storm | 23 October, 2012
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and are not done yet...
14Pierre Lassonde | The Perfect Gold Storm | 23 October, 2012
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Investment growing steadily, but gold is significantly
under-owned...
15Pierre Lassonde | The Perfect Gold Storm | 23 October, 2012
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Golds share of global allocations, 1980-2011
16
Includes: global equity, global marketable gov't debt, global private investment stocks of goldExcludes: corp/agency debt, money markets, commodities, real estate, hedge funds, private equity
If golds share doubled, it would amount to c.66,000 tonnes, equivalent to 23 years of production atcurrent levels.
Pierre Lassonde | The Perfect Gold Storm | 23 October, 2012
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China and India account for a lions share of growth...
17Pierre Lassonde | The Perfect Gold Storm | 23 October, 2012
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With rising incomes driving demand in India...
18Pierre Lassonde | The Perfect Gold Storm | 23 October, 2012
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and China...
19Pierre Lassonde | The Perfect Gold Storm | 23 October, 2012
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Commodity super-cycle
20Pierre Lassonde | The Perfect Gold Storm | 23 October, 2012
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Global Debt Crisis
Bottom Line: most countries have excessive debts
Pierre Lassonde | The Perfect Gold Storm | 23 October, 2012 21
Source: IMF Fiscal Monit or, April 2012 and IMF World Economic Outlo ok, April 2012; DundeeWealth
Government Gross Debt% of GDP
PIIGS
Over
90%spells
trouble!
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Europes pension liabilit ies are massive
2222Pierre Lassonde | The Perfect Gold Storm | 23 October, 2012
Source: Research Center fo r Generational Cont racts, January 2009NB Futu re contributions are not taken into account
Aust ria
BulgariaCzech Rep
GermanySpain
FinlandFranceGreece
HungaryItaly
LithuaniaLatviaMalta
Netherlands
PolandPortugalSwedenSlovakia
UK
%GDP
100% of GDP
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Before euro: PIIGS regularly devalued
Pierre Lassonde | The Perfect Gold Storm | 23 October, 2012
PIIGS EXCHANGE RATESJanuary 1957 to December 1998Units per Deutschemark: Jan 1957=100
100
10
21.1
15.0
10.9
6.7
4.3
Log Scale
Index ValueWhen Eurostarts - 1999
24.8
Source: DundeeWealth
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Gold rises and falls with FX liquidity
24
%
-36
-24
-12
0
12
24
36
48
60
82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12
-14
-7
0
7
14
21
28
35
42
Global Liquid ity:FX Reserves
Gold
Global Liqu idi ty: FX Reserves + US MBaseSource: IMF, Federal Reserve
Correlation: .62
Last month: August 2012Liquidity estimated
% %
Pierre Lassonde | The Perfect Gold Storm | 23 October, 2012
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Printing of money drives gold
25Pierre Lassonde | The Perfect Gold Storm | 23 October, 2012
200
350
500
650
800
950
1100
1250
1400
1550
1700
1850
82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12
0.0
1.5
3.0
4.5
6.0
7.5
9.0
10.5
12.0
13.5
15.0
16.5
Global Liquidity
FX Reserves (trillion$)
Gold (US$)
Last month: August 2012Liquidity estimated
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Dow / Gold ratio: The Ultimate Test
26Pierre Lassonde | The Perfect Gold Storm | 23 October, 2012
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The Perfect Gold Storm
Presented by Pierre Lassonde| Tuesday October 23rd, 2012
Grants Interest Rate Observer Conference, New York
Thank you