Gold Investment Symposium 2012 - Frederic Panizzutti - PAMP

MKS Group: PowerPoint Presentation – 2010

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[email protected] / www.mks.ch – [email protected] / www.pamp.com

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Frederic Panizzutti

Global Head of Sales


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MKS PRODUCTS AND SERVICES


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MKS GROUP IN THE WORLD

Switzerland

UAE

Vietnam

India Thailand

China USA

Malaysia

Australia

Singapore

Turkey

Netherland


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CONTENT

o History

o The Bretton Woods Years

o The post Bretton Woods Years

o The Era of Terror & «Washington Accord»

o The Credit Crunch and Crisis

o Modern Times

o Why Gold?

o Trends & Demand

o Gold Price


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HISTORY


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THE 3 MAJOR PHASES FOR GOLD

BRETTON WOOD YEARS

MONETARY GOLD 1944 -1975

July 1944: The Bretton Woods conference fixes the Gold price at 35 $/oz

December 1945: The IMF, when founded takes over the gold price reference at 35 $/oz and requires

25% of initial subscriptions to be paid in gold, amounting a total of 4894 tonnes in 1975

November 1961: Creation of the Gold Pool to protect the $-Gold parity set by Bretton Woods & IMF

March 1968: Abolition of the Gold Pool and USD/Gold parity. The IMF created the SDR by taking

over the value of 0.888571 per share

August 1971: The USD/Gold parity and convertibility is abolished

August 1975: The IMF decided to auction 800t of Au and to restitute part of its holding to members

Between 1945 -1970 the parity of monetized gold against the USD will be defended and its

exchange rate remains stable


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THE 3 MAJOR PHASES FOR GOLD BRETTON WOOD YEARS



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THE 3 MAJOR PHASES FOR GOLD BRETTON WOOD YEARS


January 1975: The United States start to sell gold

June 1976: The IMF starts to auction gold

April 1978: The IMF decides that gold does not anymore play a role in the

international monetary system

November 1979: The United States finishes its gold sales

From 1975 to 1979, 17 mio ounces (530 tones) of gold sold by the USA

May 1980: IMF finishes its gold sales for a total of 25 mio ounces sold (778 tones) in a price range

from 109 to 712 $/oz


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The Islamic Revolution in Iran, the Soviet invasion of Afghanistan and the oil shock - Inflation

The price of gold moves from 35 to 800 dollars an ounce within a few years. Volatile prices and

mitigated trends led to a drop in the price of gold towards 300 in 1982. Subsequently the price

recovered and gold reached USD 500 in 1983, to again decline to 300 in 1985 to reach USD 500 by

on more time in 1987

The market went through a long and painful period of declining prices marked by multiples and

unpredictable gold sales by the official sector the central banks

The price below USD 300 level to 252 $/oz, Summer 1999

THE 3 MAJOR PHASES FOR GOLD THE ABOLITION OF BRETTON WOOD

DEMONETIZED GOLD 1975 – 1999


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THE 3 MAJOR PHASES FOR GOLD DEMONETIZED GOLD 1975 – 1999


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THE 3 MAJOR PHASES FOR GOLD YEARS OF TERROR AND THE WASHINGTON AGREEMENT

SAFE HAVEN GOLD - 1999 - 2006

The European Central Bank member countries plus those of Switzerland, Sweden and The UK

announced to limit their sales to 400 tones annually from September 1999 to September 2004, 2,000

tones in all.

They also agreed not increasing their gold leasing, nor any positions in futures and options

The market reacts immediately the price of gold jumps within a few days above the important USD

300 level and moves up gradually to reach USD 430 an ounce by January 2004

The confidence is re-established

Sales by the official sector is not a dominant factor anymore

26 September 1999: Washington Central Banks Accord announced

11 September 2001: Twin Towers Tragedy in New York

07 October 2001: Afghanistan military invasion

18 March 2003: Iraq military invasion


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THE 3 MAJOR PHASES FOR GOLD GOLD IN USD PER OUNCE

SAFE HAVEN GOLD 1999 - 2008


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THE 3 MAJOR PHASES FOR GOLD GOLD IS RE-BORN

THE CONFIDENCE COME-BACK

The «Washington Agreement» announced in September 1999 allowed the market to regain

confidence and to position itself without any fears of new, non-anticipated sales, by the official sector

IN A CONTEXT

of permanent fears over new sweeping terrorist activities

of the relative fragility of the US dollar and the volatile exchange

markets

of economic uncertainty in the short term

The confidence is re-established allowing a durable recovery in the price of gold in the medium-term


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THE 3 MAJOR PHASES FOR GOLD THE CREDIT CRUNCH AND CRISIS

REMONETIZED GOLD? – 2009

February 2007 – HSBC writes-down subprime

by 10.5 BN

End of 2007 – Merrill Lynch’s and Citigroup’s

CEOs resign

Profits at the US depository institutions

decline 98%

Gold does not yet react – markets focused on

securing assets

Funds forced to close positions – mainly in

commodities


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GOLD:

Physical gold in demand in the west reaches record levels

Eastern countries take opportunity of higher prices

Major geographical shift of Gold from the East to the West

Refiners busy 24h a day

Physical gold is again the benchmark in the market

The private sector is creating its own informal gold standard

Investors are not looking anymore at the return on their capital but at the return of their invested

capital


REMONETIZED GOLD? – 2009


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REMONETIZED GOLD 2009


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MODERN TIMES


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THE GLOBAL CRISIS


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GOLD - GOOD DELIVERY PAMP BARS


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FROM THE EAST TO THE WEST


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WHY GOLD?


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Smart Money vs. Big Money

Gold’s negative correlation with stocks and

bonds in the case of a sudden crisis

Gold as a short-term hedge against

geopolitical and terrorist crisis

Gold as long-term hedge against economic

inflationary and deflationary crisis

Gold as a hedge against a weakening US

dollar

Gold as a safe haven value

AND

Gold as a rising investment

GOLD AS AN INVESTMENT ALTERNATIVE WHY INVEST INTO GOLD?


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Physical Gold as a Universal value

Physical Gold is a liquid "commodity”, it knows no borders, it is recognized and can be

bought and sold throughout the world

Physical Gold is not a liability to anyone else, it only belongs to YOU

Physical Gold a timeless and non-perishable commodity

Physical gold as a hedge to local currency depreciation

Physical Gold has a lot of value for little space

Physical Gold is easily convertible into all major currencies

Physical Gold used as a cover against domestic inflation

Physical Gold is great as a hedge against depreciation of local ccys

GOLD AS AN INVESTMENT ALTERNATIVE WHY INVEST INTO GOLD?


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CASE STUDY – GOLD AS A LAST RESORT ASSET


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TRENDS


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http://cdn2.mademan.com/wp-content/uploads/2012/01/beer1.jpg



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TRENDS &

DEMAND



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Physical Supply Physical demand

PHYSICAL GOLD



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North America

338.9 165.5

Europe

18.5 388.7

West Africa

379.2 47.3

South Africa

194 -

Oceania

273.5 3.4

Other APAC

269.2 333.7

Russia

211.9 26.9

China

371 146.1

Other CIS

134.9 7.8

Middle East

23.9 299.3

India

2.4 57.5

South America

582.1 141

GOLD SUPPLY 2011

Key: Tons

Mine production

Gold scrap



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North

America

222.1

South

America

63.3

Europe

602.2

West

Africa

15.6

South

Africa

27.8

Oceania

20.2

Other

Asia

Pacific

640.4

Russia

61.8

China

825.8

Other

CIS

25.6

Middle

East

388.5 India

1045

GOLD DEMAND 2011

Key:

Tons



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GOLD PRICE



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“Hard currency in

economics, refers to a

globally traded currency

that is expected to serve

as a reliable and stable

store of value”

HARD CURRENCY



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COMMODITY BULL MARKETS HISTORY REPEATS ITSELF

1908 - 1923

1933 - 1951

1968 - 1982

1999 – Ongoing

This could also be at

the end of History,


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GOLD

HIGH 2012: 1900.00 USD/OZ

LOW 2012: 1540.00 USD/OZ

AVERAGE 2012: 1720.00 USD/OZ

SILVER

HIGH 2012: 42.00 USD/OZ

LOW 2012: 26.37 USD/OZ


PLATINUM

HIGH 2012: 1790.00 USD/OZ

LOW 2012: 1385.00 USD/OZ


PALLADIUM

HIGH 2012: 730.00 USD/OZ

LOW 2012: 564.00 USD/OZ


PRECIOUS METALS FORECASTS MKS PM PRICE FORECASTS 2012 – PUBLISHED ON 01 JAN 2012


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MKS GROUP

FREDERIC PANIZZUTTI

[email protected]

Disclaimer: Although the information in this report has been obtained from and is based upon sources MKS believes to be reliable, we do not guarantee its accuracy and it may be incomplete or condensed. All

opinions and estimates constitute MKS' judgment as of the date of this report and are subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation for

the purchase or sale of an investment. This report does not consider or take into account the investment objectives or financial situation of a particular party.

Thank You!

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Gold Investment Symposium 2012 - Frederic Panizzutti - PAMP

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