The Race to Debase

2-Jan-02

22-May-0

2

9-Oct-

02

26-Feb-03

16-Jul-0

3

3-Dec-0

3

21-Apr-0

4

8-Sep-04

26-Jan-05

15-Jun-05

2-Nov-0

5

22-Mar-0

6

9-Aug-0

6

27-Dec-0

6

16-May-0

7

3-Oct-

07

20-Feb-08

9-Jul-0

8

26-Nov-0

8

15-Apr-0

9

2-Sep-09

20-Jan-10

9-Jun-10

27-Oct-

10

16-Mar-1

1

3-Aug-1

1

21-Dec-1

1

9-May-1

2

26-Sep-12

0

200

400

600

800

1000

1200

1400

1600

1800

2000

Spot Gold Since January 2002

2006-05-23

2006-09-12

2007-01-02

2007-04-24

2007-08-14

2007-12-04

2008-03-25

2008-07-15

2008-11-04

2009-02-24

2009-06-16

2009-10-06

2010-01-26

2010-05-18

2010-09-07

2010-12-28

2011-04-19

2011-08-09

2011-11-29

2012-03-20

2012-07-10

2012-10-30 $-

$500,000.00

$1,000,000.00

$1,500,000.00

$2,000,000.00

$2,500,000.00

$3,000,000.00

Gold Miners ETF (GDX) vs Spot Gold

5/23/06 - 11/12/12

GDXSpot Gold

2009-11-11

2010-01-06

2010-03-03

2010-04-28

2010-06-23

2010-08-18

2010-10-13

2010-12-08

2011-02-02

2011-03-30

2011-05-25

2011-07-20

2011-09-14

2011-11-09

2012-01-04

2012-02-29

2012-04-25

2012-06-20

2012-08-15

2012-10-10 $750,000.00

$950,000.00

$1,150,000.00

$1,350,000.00

$1,550,000.00

$1,750,000.00

$1,950,000.00

Junior Gold Miners ETF (GDXJ) vs Spot Gold

11/11/09 - 11/12/12

GDXJSpot Gold

Gold and the Monetary Base

Is Gold a Currency?“We see gold as an officially recognized form of money for one primary reason: it is widely held by most of the world’s larger central banks as a component of reserves.” – Deutsche Bank

Gold & Fiat Currency

Demand for Gold Net central bank purchases in 2011 exceeded 455 tonnes, the largest increase since 1964. The World Gold Council (WGC) reported that central-bank purchases totaled 80.8 tonnes

in Q1 2012, about 7% of global demand. Over the past 12 months, net purchases have averaged almost 20% of total annual supply.

09/20/1

2

09/23/1

2

09/26/1

2

09/29/1

2

10/02/1

2

10/05/1

2

10/08/1

2

10/11/1

2

10/14/1

2

10/17/1

2

10/20/1

2

10/23/1

2

10/26/1

2

10/29/1

2

11/01/1

2

11/04/1

2

11/07/1

2

11/10/1

2

11/13/1

2 $90,000,000.00

$92,000,000.00

$94,000,000.00

$96,000,000.00

$98,000,000.00

$100,000,000.00

$102,000,000.00

$104,000,000.00

KKM Hedged Gold vs Spot GoldSept. 20 – Nov. 13

Buy & Hold Gold KKM Hedged Gold Strategy

Hedging GoldWhy?• Increase profitability by knowing where to sell• Decrease volatility, making forecasting future profits easier• Create yield on gold while its being held

Buy and Hold Gold

Gold Buy Write

Average Daily Return 0.06% 0.08%

Annualized Return 16.22% 21.10%

Standard Deviation 1.15% 0.79%

Annualized Standard Deviation 18.24% 12.57%

Standard Deviation of Negative Returns 0.87% 0.72%

Annualized Standard Deviation of Negative Returns

13.80% 11.50%

Max Daily Draw Down -5.47% -4.52%

Max Daily Draw Up 3.88% 2.71%

Peak-Trough Draw Down -19.03% -10.16%

Trough-Peak Draw Up 51.78% 54.69%

Total Sharpe Ratio* 0.06

0.11

Annualzied Sharpe Ratio* 0.89

1.68

*Riskless Rate = 0.0%

Total Sortino Ratio 0.07

0.12

Annualized Sortinio Ratio 1.18

1.83

09/10/1

0

10/14/1

0

11/17/1

0

12/21/1

0

01/24/1

1

02/27/1

1

04/02/1

1

05/06/1

1

06/09/1

1

07/13/1

1

08/16/1

1

09/19/1

1

10/23/1

1

11/26/1

1

12/30/1

1

02/02/1

2

03/07/1

2

04/10/1

2

05/14/1

2

06/17/1

2

07/21/1

2

08/24/1

2

09/27/1

2

10/31/1

2 $900,000.00

$1,000,000.00

$1,100,000.00

$1,200,000.00

$1,300,000.00

$1,400,000.00

$1,500,000.00

$1,600,000.00

KKM Hedged Gold vs B&H Hold Gold

Gold Buy-Write Strategy Buy and Hold Gold Stutland Gold Buy-Write Returns

Year Q1 Q2 Q3 Q4 Annual2010 3.55% 3.41% 7.08%2011 9.28% 4.28% 10.99% 0.21% 26.74%2012 8.44% -2.47% 7.27% 0.47% 13.99%

Questions?

KKMinfo@KillirKapital.com