Mining On Top: Stockholm 2013 26-27 Nov 2013 Outlook for precious metals prices – Jeffrey Christian, CPM Group; Managing Director

1. The Outlook for Precious Metals
Mining On Top
Intierra/Raw Material Group
Stockholm
27 November 2013
Jeffrey M. Christian
Managing Partner
jchristian@cpmgroup.com
30 Broad Street, 37th Floor
New York, NY 10004
www.cpmgroup.com

2. Slower Real Economic Growth Globally Long Term
Real Gross Domestic Product
Annual, Projected Through 2022
Percent Change
10
Percent Change
10
Actual
8
Projected
8
6
6
4
4
2
2
0
0
World
-2
-2
Emerging and Developing Economies
-4
-4
Advanced Economies
-6
-6
1980
1985
1990
1995
2000
2005
2010
2015p
2020p
Source: IMF, CPM Group
Note: Historical data are IMF statistics. Projections are made by CPM Group. Projections for "Emerging and Developing Economies are only for BRIC countries, which account for
approximately 52.8% of this category. Projections for "Advanced Economies" are only for the U.S., U.K., Eurozone, and Japan. These countries accounted for 82.2% of this category.
2

3. The Outlook For Gold
3

4. Gold Prices
Nearby Active Comex Gold Futures High, Low, and Settlement Prices
Daily, Through 19 November 2013
$/Ounce
2 000
$/Ounce
2 000
1 900
1 900
1 800
1 800
1 700
1 700
1 600
1 600
1 500
1 500
1 400
1 400
1 300
1 300
1 200
1 200
1 100
1 100
1 000
jan-10
1 000
maj-10
sep-10
jan-11
maj-11
sep-11
jan-12
maj-12
sep-12
jan-13
maj-13
sep-13
4

5. Large Comex Gold Trading Volumes In October
Contrary to market commentary:
1. More than of the trades have been heavy buying pushing prices higher; obviously not ‘smack-downs.’
2. No single entity but hundreds of algorithmic traders using similar systems generating the same sell points.
Recent Major Intraday Price and Volume Changes
Volume During Time Interval
Troy Ounces
as % of Total
Daily December
Contract Volume
as % of Total
Daily Aggregate
Futures Volume
Price Action during Daily Change in
Time Interval S ettlement Prices
Date
Time Interval
S top Logic
22-Oct
8:20 - 8:30
NA
2,219,600
13.9%
12.6%
$19.50
$26.80
17-Oct
4:00 - 4:10
No
1,780,000
8.2%
8.1%
$33.00
$40.70
15-Oct
9:50 - 10:00
No
1,320,000
6.5%
6.1%
$11.00
-$3.40
11-Oct
8:50 - 9:00
20 S econds
2,810,000
15.1%
14.3%
-$27.00
-$28.70
9-Oct
10:10 - 10:20
No
1,280,000
8.1%
7.8%
-$10.00
-$17.40
7-Oct
9:50 - 10:00
No
1,140,000
11.9%
11.4%
$11.00
$15.20
1-Oct
8:40 - 8:50
10 S econds
2,410,000
11.3%
10.9%
-$24.00
-$40.40
2,166,667
1,614,900
1.34
11.5%
10.1%
1.14
11.0%
9.6%
1.15
-$20.33
$18.63
-1.09
-$28.83
$19.83
-1.45
Averages on Declines
Averages on Increases
Ratio of Declines to Increases
Note: Time is military time, EDT.
S ources: Reuters data, CPM Group
5

6. The Outlook for Gold
Gold prices have fallen to what CPM Group sees as a base. Prices may consolidate for a
couple of years around $1,300 - $1,400 on an annual average basis, and may not fall much
further.
For prices to fall further economic conditions would have to improve dramatically
more, which we do not see happening.
For prices to rise more forcefully than we envision, economic conditions would have
to deteriorate very sharply. This seems more possible than stronger than expected growth.
Mine production continues to rise, but the growth expectations have been cut in half by lower
gold prices and investor disenchantment with gold mining companies.
Secondary supply has fallen sharply as prices declined – 17% in 2013 alone.
Investors have sharply reduced their gold buying. Still high, net purchases are off 25% in 2013.
Those few central banks that were buying gold have pulled back on purchases, waiting to see
how low prices will fall.
Fabrication demand is rising modestly in line with lower gold prices and slow economic
recovery.
6

7. Gold Investment Demand
7

8. Investors Physical Gold Purchases Are Sharply Lower
Investment Demand's Effect on Gold Prices
Price Change Through 19 November 2013
Percent Change
Million Ounces
110
60
90
50
Price Change
Net Investment Demand (Right)
70
40
50
30
30
20
10
10
-10
0
-30
-10
66
69
72
75
78
81
84
87
90
93
96
99
02
05
08
11
13p

9. Gold Demand Is Up In China and Weak In India
Total Indian Demand
Million Ounces
40
Investment Demand
Total Chinese Demand
Million Ounces
Million Ounces
40 40
Fabrication Demand
Net Investment Demand
Million Ounces
40
Fabrication Demand
35
35 35
35
30
30 30
30
25
25 25
25
20
20 20
20
15
15 15
15
10
10 10
10
5
5
5
5
0
0
0
0
01 02 03 04 05 06 07 08 09 10 11 12 13p
01 02 03 04 05 06 07 08 09 10 11 12 13p
9

10. Spread Between Shanghai and London Gold Prices
Spread Between Shanghai and London Gold
Prices
Monthly Average, Through October 30,
2013
Spread Between Shanghai and London Gold Prices
Daily, through 7 November 2013
$/oz
$/oz
40
40
$/Oz
$/Oz
100
100
Premium
35
35
80
60
60
40
40
20
30
80
20
0
0
30
Premium
25
25
$18.90
20
Annual Average
Premiums
15
20
15
$8.86
10
$6.10
10
$5.24
5
5
$2.27
0
0
-20
Discount
-5
-5
-10
-10
03
04
05
06
07
08
09
10
11
12
13
-20
Discount
-40
J-13
-40
F-13
M-13
A-13
M-13
J-13
J-13
A-13
S-13
O-13
N-13
10

11. Gold ETFs: Easy To Buy, Easy To Sell
ETF Gold Holdings Through 30 October 2013
Million Ounces
90
80
Million Ounces
90
Annual Net Changes to Gold ETP Holdings
Through October 2013
Million Ounces
25
20
20
15
15
10
70
10
5
5
0
0
60
-5
-10
-10
-15
-15
-20
40
70
60
-5
50
80
Million Ounces
25
-20
-25
-25
-30
50
40
-30
03
04
05
06
07
08
09
10
11
12 13YTD
30
30
20
20
10
10
-
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013

12. Record Investor Short Positions on Comex Earlier in 2013
Non-Commerical Positions in Comex Gold Futures & Options. Weekly Data, through 12 November2013
Million Ounces
35
Million Ounces
35
30
30
Net Fund Position in Comex
25
25
Long
20
20
15
15
10
10
5
5
0
0
-5
-5
Short
-10
-10
-15
A-95
-15
J-97
S-98
J-00
M-02
D-03
A-05
M-07
F-09
O-10
J-12

13. Gold Supply, Fabrication Demand,
and Official Transactions
13

14. Total Supply Declining, But Mine Production Is Rising
Total Gold Supply
Annual, Projected Through 2013
Mln Oz
140
Mln Oz
140
Secondary Supply
120
120
Transitional Economies Exports to Market
Economies
100
100
Market Economy Mine Production
80
80
60
60
40
40
20
20
0
0
73
75
77
79
81
83
85
87
89
91
93
95
97
99
01
03
05
07
09
11
13p

15. Gold Mine Supply In Fact Was Flat Between 2000 and 2012
Total Gold Mine Supply
Annual, Projected Through 2013
Transitional Economies Exports to Market Economies
Market Economy Mine Production
Mln Oz
3.3%
90
80
70
60
50
40
30
20
10
0
00
01
02
03
04
05
06
07
08
09
10
11
12
13p
15

16. It Has Risen More Than 11 Million Ounces Since 2008
Total Gold Mine Supply
Annual, Projected Through 2013
Transitional Economies Exports to Market Economies
Market Economy Mine Production
Mln Oz
90
85
15.8%
80
75
70
65
60
08
09
10
11
12
13p
16

17. Mine Supply Is Forecast To Be The Second Highest On Record in 2013
Total Gold Supply
Annual, Projected Through 2013
Mln Oz
90
Transitional Economies Exports to Market Economies
80
Market Economy Mine Production
70
60
50
40
30
20
10
0
73
75
77
79
81
83
85
87
89
91
93
95
97
99
01
03
05
07
09
11
13p
17

18. Lower Gold Prices Have Slashed Estimated Gross Additions to Gold
Mine Production Capacity Almost By Half
September 2013
January 2013
Post 2016
35
Mln. Oz.
40
Mln. Oz.
Mln. Oz.
40 40
Mln. Oz.
40
Post 2016
35 35
2016
35
2016
30
2015
30 30
30
2015
2014
25
25 25
25
2014
2013
20
20 20
15
15 15
15
10
10 10
10
5
5
5
5
0
0
0
0
2013
2014
2015
2016
Post 2016
20
2013
2013
2014
2015
2016
Post 2016
Note: Post 2016 data refers to 2017 through 2022.
Note: Post 2016 data refers to 2017 through 2022.
18

19. Effective Hedging Is Needed, But Faces The Same Old Obstacles
Producers this month could lock in a guaranteed floor of $1,110 per ounce and
given up only $60 of any upside.
Gold HedgeFor Dec 2014
Obstacles To Effective Hedging
Indicatively priced on 10 October 2013
US$ / Ounce - Sales Price
• Mining companies often lack
2 000
financial expertise to evaluate,
counter-bid, and effectively manage
hedging programs.
1 800
1 600
• Banks offer less than ideal hedges
to mining companies, which lack the
internal capacity to evaluate proposed
hedges and counter-bid.
1 400
1 200
$1,100 Floor
1 000
800
Spot Sales
600
600
800
1 000
1 200
1 400
Market Price
1 600
1 800
2 000
• Conflicts of interest and obstacles
from the 1990s still exist in the
market.
19

20. Gold Fabrication Demand
Gold Fabrication Demand
Projected Through 2013
Million Ounces
120
Million Ounces
120
Jewelry Developed Countries
Other Uses
100
100
Dental/ Medical
80
80
Electronics
60
60
40
40
Jewelry - Developing Countries
20
20
0
0
77
80
83
86
89
92
95
98
01
04
07
10
13p

21. Official Transactions, Adjusted for Turkish Central Bank Additions
Official Transactions
Annual Data, Projected through 2013
Million Ounces
20
Net Additions
15
Million Ounces
20
Adjusted for Turkish Central Bank's ROM Gold
15
10
10
5
5
0
0
-5
-5
-10
-10
-15
-15
-20
-20
-25
-25
Net Reductions
-30
-30
-35
-35
80
83
86
89
92
95
98
01
04
07
10
13p
Note: Turkey introduced a policy in 2011 that allowed commercial banks to use gold to meet a portion of their reserve requirements. The bank included this gold in its monetary
reserves. Because these additions were not outright central bank purchases and no ownership has been transferred from the actual owner to the central bank, annual official transactions
have been adjusted to exclude Turkish central bank gold additions since 2011.

22. Why are Central Banks Adding Gold to their Monetary Reserves?
Currency Composition of Official Foreign Exchange Reserves
100%
90%
Yen; 6.8%
80%
70%
Euro
27.3%
Other; 4.8%
Pound; 2.1%
Yen; 6.1%
Other; 1.8%
Pound; 2.8%
Other; 5.9%
Pound; 4.1%
Yen; 4.1%
Euro
18.3%
Euro
24.1%
60%
50%
40%
30%
U.S. Dollar
59.0%
U.S. Dollar
71.1%
U.S. Dollar
61.8%
20%
10%
0%
1995
2000
2012
Note: 1995 Claims in Euros refers to the sum of claims in Deutschemarks, French francs, Netherland guilders, and the European Currency Unit. 2012
data is end-September. Other years is year-end data.
Source: IMF Statistics Department COFER database and International Financial Statistics.

23. Silver

24. Silver Prices: Waning Investor Interest
Comex Silver Prices
Daily, Through 19 November2013
$ / Oz
$ / Oz
55
55
50
50
45
45
40
40
35
35
30
30
25
25
20
20
15
15
10
Jan-10
10
May-10
Sep-10
Jan-11
May-11
Sep-11
Jan-12
May-12
Sep-12
Jan-13
May-13
Sep-13

25. Key Silver Market Trends
•
Investment Demand is projected to
decline 43% to 97.5 million ounces in
2013, despite an expected 30 million
ounce increase in coin demand. Large
institutional and high net worth
individuals with short to medium term
investment horizons appear to be selling
their bullion due to cyclical weakness.
Silver Supply and Demand Balance
Projected Through 2013
Million Ounces
1100
1000
1000
900
900
800
•
•
Total Newly Refined Supply may
decline 5% in 2013, mostly due to the
19% drop in old scrap, a highly pricesensitive source of supply.
Fabrication Demand is expected to
rise to 838.7 million ounces this year,
up 3% from a year ago. This increase is
almost entirely driven by the 17.6
million ounces increase in jewelry and
silverware demand, which has
benefitted from lower silver prices.
Million Ounces
1100
Fabrication Demand
800
700
700
600
600
Supply
500
500
400
400
300
300
200
200
60 63 66 68 72 75 78 81 84 87 90 93 96 99 02 05 08 11

26. Silver Investment Demand to Drop 43% This Year
Silver Market Balance
Projected Through 2013, Prices through 2012
Million Ounces
$/Ounce
50
250
Net Additions
Net Changes in Inventories
45
200
40
150
35
100
30
50
25
0
20
-50
Price (LHS)
15
-100
10
-150
5
-200
Net Withdrawals
0
-250
60
64
68
72
76
80
84
88
92
96
00
04
08
12e

27. Investment Demand Trends by Source
Investment Demand by Region
Mln Oz
Investment Demand by Major Investment Vehicle
Mln Oz
250
250
Mln Oz
Other
200
200
China
India
250
Net Investment Demand
200
150
Mln Oz
250
200
Other
Net Investment
Demand
150
150
150
ETPs
100
100
100
50
100
50
Coins
50
0
0
50
0
0
-50
-100
-50
-50
-100
-150
-150
-50
-100
-100
-150
-150
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Note: Bars represent gross investment demand.
-200
-200
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Note: Bars represent gross investment demand.

28. Silver ETFs And Ample Silver Inventories
Silver ETP Holdings
Through October 2013
Mln Oz
700
600
500
ZKB
400
300
SLV
200
100
CEF
0
2000
2002
2004
2006
2008
2010
2012

29. Major Short Building in 2012 and 2013
Gross Long and Short Positions of Non-Commercial Positions
Comex Silver Futures and Options. Weekly Data, Through 12 November 2013
Mln Ozs
Mln Ozs
400
400
Net Fund Position in Comex
350
350
300
250
300
Long
250
200
200
150
150
100
100
50
50
0
0
-50
-50
-100
-100
Short
-150
-150
-200
A-95
-200
M-97
J-99
A-01
S-03
N-05
D-07
J-10
F-12

30. Total Supply is Expected to Decline 5% in 2013
Annual Total Supply
Projected Through 2013
Million Ounces
Million Ounces
1 100
1 100
1 000
1 000
Net Exports from Tran. Econ.
900
900
800
800
Secondary
700
700
Government Disposals
600
600
500
500
400
400
300
300
Mine Production
200
200
100
100
0
0
78
80
82
84
86
88
90
92
94
96
98
00
02
04
06
08
10
12e

31. Secondary Supply Rose in 2012, but is Projected to Decline 19% in 2013
Annual Secondary Supply
Projected Through 2013
Million Ounces
Million Ounces
350
350
South Asian Exports
300
300
Indian Scrap
250
250
Demonetized Coins
200
200
Old Scrap
150
150
100
100
50
50
0
0
77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12e 13p

32. Fabrication Demand Expected to Rise 3% in 2013
Annual Total Fabrication Demand
Projected Through 2013
Million Ounces
Million Ounces
1 000
1 000
Net Imports into Transitional Economies
900
900
Super Conductors
800
800
Biocides
Other Uses
700
700
Other Countries
600
600
Photovoltaic
Electronics
500
500
400
400
Jewelry and Silverware
300
300
200
200
100
100
Photography
0
0
77
79
81
83
85
87
89
91
93
95
97
99
01
03
05
07
09
11
13p

33. Electronics Demand Growth is Slowing
Silver Fabrication Demand for Electronics and Batteries
Annual, Projected Through 2013
Million Ounces
260
Million Ounces
260
240
240
220
220
200
200
Other Countries
180
180
160
160
China
140
140
120
120
Japan
Europe
100
100
80
80
60
60
40
40
U.S.
20
20
0
0
77
79
81
83
85
87
89
91
Note: Prior to 2000, China was excluded from market economy demand statistics.
93
95
97
99
01
03
05
07
09
11
13p

34. First Drop in Silver Demand from Photovoltaics in 2012, Recovered in 2013
Solar Panel Silver Demand, Installations, and Production
Projected Through 2013
Million Ounces
Gigawatts
60
60
PV Silver Demand (Left Scale)
50
50
Solar Panel Installations
40
40
30
30
20
20
10
10
0
0
00
01
02
03
04
05
06
07
08
09
10
11
12
13p

35. Chinese Silver Imports are Down 40% This Year Through September
Chinese Silver Imports and Exports
Monthly, Through September 2013
Moz
Moz
25
25
20
20
15
15
10
10
5
5
0
0
-5
-5
-10
-10
Gross Imports
-15
-20
Gross Exports
-15
-20
Net Trade
-25
-25
J-05
S-05
M-06
J-07
S-07
M-08
J-09
S-09
M-10
J-11
S-11
M-12
J-13

36. Indian Silver Imports Have Doubled from Last Year So Far
Reported Net Silver Imports to India
Annual, through June 2013
Million Ounces
200
180
160
140
120
100
80
60
40
20
0
1999
2001
2003
Note: Light blue bars are January through June only.
Source: GTIS - HS Code 7106
2005
2007
2009
2011
2013 YTD

37. CPM Group Precious Metals Yearbooks & Other Reports
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37