Superund Gold

1) The Stimulus EffectThe 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 DecemberIf 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 39.9million shares of AngloGold, worth $1.28 billion. Other major hedge funds are piling intogold 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 onlyequals 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, accordingto 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 Gold10 Reasons to be bullish about Gold

6) The Paper Dollar’s 30% DropSince 2001, the U.S. Dollar Index has tanked 30%...while gold has risen 300%. With allthe 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 1During 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 GoldCurrently, the U.S. government holds about 286.9 million ounces of gold. It has printedabout $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.

10 Reasons to be bullish about Gold10 Reasons to be bullish about Gold

Reasons to be bearish about GoldReasons to be bearish about Gold

Value of Gold over 600 yearsValue of Gold over 600 years(in 1998 US Dollars)(in 1998 US Dollars)

Long Term Dow Jones CycleLong Term Dow Jones Cycle

Dow to Gold ratio 30 year weekly chartDow to Gold ratio 30 year weekly chart(to 30/06/09)(to 30/06/09)

Gold vs Swiss FrancsGold vs Swiss Francs10 Year Weekly Chart (to 30/06/09)10 Year Weekly Chart (to 30/06/09)

155,000 4.8

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 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?

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…

…

…

Gold FactsGold Facts

155,000 4.8

Did you know that…

…

…

…

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 United States abandoned the “Gold Standard” in 1971, thus breaking the last tie between gold and circulating currency?

… the price of gold hit a record of $1011 in March 2008?

… a 22-karat gold bracelet weighing 12 ounces only gives you 11 ounces of pure gold?

Gold FactsGold Facts

Gold as CurrencyGold as Currency

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.

Why Invest in Gold?Why Invest in Gold?

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.

Arguments for an allocation to GoldArguments for an allocation to GoldIn a Diversified Portfolio Include:In a Diversified Portfolio Include:

Gold is among only a handful of financial assets that is not matched by aliability. It provides ‘insurance’ against extreme movements in the value oftraditional assets when markets are unsettled.

In fact, over the past thirty years, the correlation between gold and the DowJones Industrial Average (DJIA) actually declined during the worst 30 monthsof the DJIA – showing that gold investors were protected when they needed it most.

Source: World Gold Council

Gold as a Safe HavenGold 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.

Gold as a Safe HavenGold as a Safe Haven

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.

Recent Examples of the RefugeRecent Examples of the RefugeAfforded by Gold:Afforded by Gold:

Aug. 15, 1971

Nixon ends Gold Standart,

suspending convertibility of dollar into gold

1975 - 1976

U.S. Treasury begins public sales of gold stocks. IMF 5-years gold sales program.

IMF auctions and lower inflation outlook

drive gold prices down

Jan. 21, 1980

Gold hits high of $ 850 amid Islamic Revolution in Iran and Soviet invasion of

Afghanistan

Jan. 1983

Gold rises above $500 as interest rates fall, then falls $105 in

the last 4 trading days of February

Oct. 1987

Stock market crashes. Gold

surpasses $500 in December

Jan. 1989

Gold falls bellow $500

Jan. 17, 1991

Gold tumbles as air phase of Gulf War

begins

1992 - 1996

Gold price remains relatively

stable

Summer 1999

Gold tumbles to $250 after Bank of England announced it planned to sell more than half

its gold reserve

2000

Bull Market: Down hits top in January. Nasdaq, S&P and Wilshire 5000

hit highs in March

Sep. 2001

Investors turn to gold as haven following terrorist

atacks

Oct. 2002

End of bear market in stocks

Mar. 19, 2003

U.S. / British coalition invades

Iraq

Dec. 2005

Gold tops $500

Apr. 2006

Gold futures cross $600 on

dollar weakness, geopolitical

tensions over Iran’s nuclear

program

Jan. 30, 2008

Gold futures hit record high

reaching $936.30

Source: Wall Street Journal

As inflation has picked up and the stock market has tumbled, investors seeking a safe haven have piled into gold, driving the metal to all-time highs.

Gold futures have risen more than 48% in the last 2 years and was traded at a record of more than $1000 in March 2008.

To keep pace with inflation going back to 1980, gold futures would need to be above $ 1,800 today

Is Gold Really Reaching an All Time High?Is Gold Really Reaching an All Time High?

Gold as an Inflation HedgeGold as an Inflation Hedge

Gold experienced a fierce bull market in the ’70s as inflation accelerated

Source: Superfund Data

Gold vs. CPI

$0

$100

$200

$300

$400

$500

$600

Jan-70 Mar-71 May-72 Jul-73 Sep-74 Nov-75 Jan-77 Mar-78 May-7930

40

50

60

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80

90

100

Gold (left scale)CPI

Gold can serve as a Gold can serve as a ““HavenHaven””in time of Crisisin time of Crisis

Gold's value as a safe haven can be illustrated by its behavior during periods of financial turmoil.

Gold in Mexican Pesos

500

1000

1500

2000

2500

3000

3500Ja

n-91

Jul-9

1

Jan-

92

Jul-9

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93

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94

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95

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5

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96

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6

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97

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7

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98

Jul-9

8

Jan-

99

Jul-9

9

Source: Superfund Data

Mexico Crisis

Gold Performs Well During Fiscal CrisesGold Performs Well During Fiscal Crises

Asian Crisis (represented by Thai experience)

Gold in Thai Baht

6500

8500

10500

12500

14500

16500

18500Ja

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Jul-9

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Jan-

92

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93

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94

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95

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5

Jan-

96

Jul-9

6

Jan-

97

Jul-9

7

Jan-

98

Jul-9

8

Jan-

99

Jul-9

9

Asian Crisis

Source: Superfund Data

Gold Performs Well During Fiscal CrisesGold Performs Well During Fiscal Crises

Gold in Russian Rubles

100

1100

2100

3100

4100

5100

6100

7100

8100

9100Ju

l-93

Nov

-93

Mar

-94

Jul-9

4

Nov

-94

Mar

-95

Jul-9

5

Nov

-95

Mar

-96

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6

Nov

-96

Mar

-97

Jul-9

7

Nov

-97

Mar

-98

Jul-9

8

Nov

-98

Mar

-99

Jul-9

9

Nov

-99

Russian Crisis

Source: Superfund Data

Russian Crisis

Gold Performs Well During Fiscal CrisesGold Performs Well During Fiscal Crises

Source: Superfund Data

Purchasing Power of GoldPurchasing Power of Gold

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 wealthDuring periods of economic and social turmoil, gold has been a saferefuge 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).

Maintaining Value in the Long TermMaintaining Value in the Long Term

Gold is widely considered to be a particularly effective hedge against fluctuations in the US dollar, the world's main trading currency.

Dollar HedgeDollar Hedge

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.

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.

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.

Source: World Gold CouncilData: Global Insight,WGC

Historical VolatilityHistorical Volatility

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.

Central Bank TransactionsCentral Bank Transactions

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, forlarger quantities, by way of the over the counter market

Gold futures and options

Gold mining equities, often packaged in gold oriented mutual fundsExchange- 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.

Liquidity and Ease of TradingLiquidity and Ease of Trading

> ETF: holdings grew by more than 260t (8.3 Moz) in January and the first half of February 2009 alone.

> China Increased Gold Reserves 76% to Fifth-Largest holder in the world (2003-2009).

> Jewellery demand amounted to US$54B in 2007, making it one of the largest categories of consumer goods.

> India accounted for 25% of global demand in 2007.

Annual gold production represents only 1.5% of existing stocks of gold.

Central Banks are selling less gold:

> In 2008 official sales of gold were 42% lower from a year ago.

> Official sales fell to 8% of total gold supply in 2008 from 14% a year ago.

Increase in Gold Reserves

Increase in Investment Demand

Increasing Jewellery demand from China and India:

Limited SupplyLimited SupplyRising DemandRising Demand

Supp;y & DemandSupp;y & Demand

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

WHY?

Portfolio DiversificationPortfolio Diversification

Gold price is not driven by the same factor that drive the performance of other assets

Gold/Silver Ratio (1900Gold/Silver Ratio (1900--2008)2008)

State Intervention to

stimulate the economy by

printing money

Financial crises

Risk of Default of government debt

An environment of Low or Negative Interest Rates

Expanding a country’s money supply generally leads to inflation, which results in the falling value of paper money

When the financial system is being questioned and investors feel insecure about their investments

Deficits increase when governments spend money to stimulate their economies. Government bonds are the basis for fixed-income investments in all countries, but are viewed cautiously when spending goes wild.

When real interest rates are low or negative, gold’s popularity as a secure alternative investment increases (because the return on other low-risk assets is small or negative).

Historically, gold rose steadily when at least two of the following conditions were met:

When Did Gold Appreciate?When Did Gold Appreciate?

“…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 linkeddirectly 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)

QuotesQuotes

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.

DisclaimerDisclaimer

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.

DisclaimerDisclaimer