Presentation on theme: "The Strategic Case for Gold Amsterdam 11 October 2009"— Presentation transcript:
1 The Strategic Case for Gold Amsterdam 11 October 2009
2 DisclaimerThe information and opinions contained in this presentation have been obtained from sources believed to be reliable, but no representation or warranty, express or implied, is made that such information is accurate or complete and it should not be relied upon as such. This presentation does not purport to make any recommendation or provide investment advice to the effect that any gold related transaction is appropriate for all investment objectives, financial situations or particular needs. Prior to making any investment decisions investors should seek advice from their advisers on whether any part of this presentation is appropriate to their specific circumstances. This presentation is not, and should not be construed as, an offer or solicitation to buy or sell gold or any gold related products. Expressions of opinion are those of the World Gold Council only and are subject to change without notice.
3 Introducing World Gold Council Funded by the world’s leading gold mining companiesWe promote the use of gold in all its forms through marketing activities in major international markets.Offices in key consuming countries:IndiaChinaMiddle EastUnited StatesMEMBERSAgnico EagleAngloGold AshantiBarrick Gold CorporationCoeur d’Alene Mines CorporationCompania de Minas BuenaventuraEldorado GoldGoldcorpGold Fields LimitedHarmonyIAM GoldKinross Gold CorporationNewmont Mining CorporationPeter Hambro MiningYamana GoldASSOCIATESCediminChina National Gold CorporationThe Hutti Gold Mines CompanyKahama MiningMinera Yanacocha S.R.L.Mitsubishi Materials CorporationRoyal Gold Inc.
4 OutlineDemand and supply fundamentals – resilient demand and constrained supplyThe outlookKey investment attributesA hedge against inflationA hedge against dollar movementsA safe haven and insurance policyA diversifier
16 Why gold? A safe haven and form of insurance A simple assetNo default riskNo counterparty riskLiquidGold’s historyAs a means of exchangeAs the centre of the global monetary system
17 Gold is a hedge against inflation uncertainty Inflation or deflation?Gold is a long run hedge against inflationYet, a period of deflation suggests ongoing economic uncertainty, so safe haven flows would remain underpinnedMedium to longer term, inflation is a significant risk
19 Correlations, weekly returns 3 years ending June 2009 Gold is a diversifierCorrelations, weekly returns 3 years ending June 2009Gold1.00FTSE 100-0.22DAX 30-0.20S&P500-0.10MSCI World Ex UK-0.28LB /BarCap Global Treasuries Index , TR, GBP0.02LB/BarCap Global Treasuries Index, TR, Euro-0.01Euribor, 3 month0.01UK Lending Rate, 3 month0.03Red text denotes that correlation coefficient is not significantly different from zero.Violet text denotes that correlation coefficient is negative (5% level of significance).Data: Global Insight, Lehman Bros., WGC
20 Gold is not particularly volatile Average 22 Day Volatility,1 August 2007 – 31 October 2009(%)Oil50.1Silver41.2Palladium36.1GSCI Index32.8Nikkei31.7Platinum31.2FTSE27.4Gold23.8Dow Jones Euro Stoxx Index20.3
23 Over and above a commodity basket Optimal Portfolios Composition Map0.0%10.0%20.0%30.0%40.0%50.0%60.0%70.0%80.0%90.0%100.0%4.3%4.6%4.9%5.4%6.0%6.7%7.3%8.0%8.8%9.6%10.5%11.4%volatilityallocationUK Gilts ShortUK Gilts MediumUK Gilts LongGlobal BondsUK EquitiesEurope Ex UK EquitiesNorth American EquitiesPacific EquitiesGoldCommodities
24 SummaryThe demand for gold has shown considerable resilience across the economic cycleThe three sectors provide a source of balanceThe outlook for supply remains constrainedHigh levels of uncertainty – economic, inflation, currency – are supportive for goldGold’s biggest strength is its diversification properties - the focus on diversification and risk management are expected to continue