1. GOLD
GROUP 1: Charles, Farah, Joanne, Pamela, Raymond, Xi

2. Topics
• Introduction
• Gold Price Movement
• Gold vs. US Dollar
• Gold vs. Inflation
• Gold vs. Stock
• QE (Quantitative Easing)
• Investment Strategies
• The Future of Gold Price

3. Introduction
• Usages of Gold
• Demand
• Gold Production

4. Demand
• Individual Demand
- The U.S. interest rate is near zero.
- Investors prefer holding and purchasing more GOLD.
- i.e. Chinese citizens stocking up
• Worldwide Central Banks Demand
- i.e. Chinese Central Banks

5. Three Major Purposes
• Jewelry Market
• Investment Purpose
• Industrial Use

6. Worldwide Jewelry
• Jewelry accounted for 54% of gold
demand, which totaled 3812 tonnes, in
2010.
• Jewelry Market
• India, China, & the US are the largest
consumers of gold for jewelry.

7. Industrial Use
• Manufacturing of electronic & medical
devices.
• Electronic:
Electronic components made with gold are
highly reliable.
• Medical devices
i.e. Dentistry

8. Gold Production
China, South Africa, the US., Australia, the Russian
Federation and Peru.
2011
- China, 355 tons;
- Australia: 270 tons
- United States: 237 tons
- Total (World): 2710 tonnes

9. Gold Price Movement

10. What factors drive the gold price?
• Current Events; Breaking News.
• Devaluate USD
• Others
i.e. Higher Cost of Gold Mining

11. Gold Price Movement
Gold Price Movement 2011 - 2012
2000 20%
1800
15%
1600
1400 10%
1200 5%
1000
0% Gold Price
800
600 Gold Price % change
-5%
400
-10%
200
0 -15%
2012 Jan Feb Mar Apr May Jun Jul Aug Sep Oct
Gold Price (in $) 1656.12 1742.62 1673.77 1650.07 1585.5 1596.7 1593.91 1626.03 1744.45 1757.11
Gold Price %
change 0.23% 5.22% -3.95% -1.42% -3.91% 0.71% -0.17% 2.02 7.28 0.73%

12. Why???
• August 31st, US Fed hinted that more money stimulus to
come. Mr. Bernanke defended his monetary policy.
• September 6th, Mr. Draghi in Europe confirmed earlier
rumors that the ECB would buy bonds of several
European countries that are in trouble.
• September 7th, the unemployment figures in the US
showed worse than expected results.
RESULT
Gold closed the trading session on September 7th with a
solid gain of 2.7%.

13. How Gold Price Moved on
Sept. 7 th, 2012

14. Gold Price vs. US Dollar
• The price of gold is generally inversely
related to the value of the US dollar.
• Why?

15. Long Term 1970 - 2011

16. Recent 2011 – 2012
14
12
10
8
6
4 USD Index % change
2 Gold Price % change
0
-2
-4
-6
-8

17. US Dollar vs. Interest Rate
• Real Interest Rate is positively related to
USD demand. (r = n – i; r = 0.5 in 2011)
• US Federal Reserve to keep interest rates
near zero until 2014.
• Interest Rate Forecast

18. Prediction
• Predictions (Obama vs. Romney)
1. Obama Win: r keeps low; USD continues
devaluating.
2. Romney Win: Ben Bernanke will be replaced. r
may increase, and USD may appreciate.
• In a recent interview on
GoldSilverWorlds.com, Grant Williams stated that:
“The current gold price breakout looks like it has
some legs at the moment. If we get QE3 during the
Fed meeting next week, I expect gold to make a
further run.”

19. Gold Price vs. Inflation
• Inflation
• Definition: The general rise in the price
level (rather than an increase in the money
supply) and use changes in the Consumer
Price Index as the measure of monthly
inflation.

20. Gold Price vs. Inflation
14
12
10
8
6
4 Gold Price % change
2 CPI % change
0
-2
-4
-6
-8

21. Gold Price and Stock
Relationship
Inverse Growth Relationship
When stock goes up, investors turn to stock market which
enables them to make more profits in a short time rather
than a long-term investment in gold. So I assume that they
are more likely to sell their gold rather than keeping it. This
drives the growth of gold price down.

22. Monthly Growth

23. QE, Stock, Gold Relationship
• QE-------Stock
• Stock------Gold Price
• QE indirectly affect the Gold Price

24. QE----Quantitative Easing
• Definition:BASICALLY: Printing $$
QE, Stock & Gold Price??
Hypothesis: Printing more money, as the investor gain more
money, they will invest in stock as short term investment. Since
they make more profit in shorter time, investors tend to sell their
long term investment such as gold. The growth of gold price
goes down because more people are selling gold.

25. Current Investment
Strategies
• $$ $$
• Gold and Silver
• Long term
• Gold mining stocks, exchange traded fund, gold mutual fund.
• Jewelry
• Catalyze the economy
• Construction, resources
• Mining stocks
• Short-term: after QE3
• Long-term: after economic recovery
• Oil, Oil-related product stocks
• Housing

26. The Future of Gold Price
As we are expecting inflation in 2013, the gold price will
continuous to go up
Jim Rogers: “I am not selling my gold and silver … gold
and silver will both go much, much higher over the course
of the bull market.”
(The above quote was attributed to Jim Rogers in an
October 2012 interview. Rogers has been an advocate of
physical assets and commodities, including
gold, throughout his investing career.)

27. Reference
http://www.guardian.co.uk/business/2012/jan/25/federal-
reserve-interest-rates-near-zero
http://www.forbes.com/sites/billconerly/2012/05/02/interest
-rate-forecast-2012-2013/
http://goldsilverworlds.com/gold-silver-price-news/gold-
price-breakout-continuing-on-september-7th-2012/

28. END