PRECIOUS METALS MARKET OUTLOOK

PHILIP KLAPWIJK

GLOBAL HEAD OF METALS ANALYTICS

Mines & Money Hong Kong Conference

20th March 2012

THOMSON REUTERS GFMS

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‘Top Down’ research.

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group’s research and data services in precious and base metals.

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and long term forecasts on precious and base metals.

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PRECIOUS METALS PRICES SINCE 2001

Source: Thomson Reuters GFMS

PRECIOUS METALS PRICES IN 2012

Source: Thomson Reuters GFMS

PHYSICAL PRECIOUS METALS MARKETS: VALUE OF TOTAL DEMAND IN 2011

Source: Thomson Reuters GFMS

Value of Total Demand in 2011 = $280.9 billion

NET INVESTMENT INFLOWS INTO PRECIOUS METALS MARKET IN 2011

Source: Thomson Reuters GFMS

Net Investment Inflows into Precious Metals Market in 2011 = $92.2 billion

ECONOMIC BACKDROP IN 2012 – BASE CASE

• Slowdown in world GDP growth to 2.3% annual rate. Downturn in both OECD and most

EMs. Deceleration in global industrial production more marked.

• USD generally stronger this year, e.g. forecast average USD/EUR of 1.28.

• Eurozone debt crisis continues in 2012, with only slow progress towards resolution.

However, a break-up of the single currency is avoided.

• Short-term interest rates in nearly all major economies remain at ultra-low levels throughout

2012 and at close to zero if not negative in real terms.

• Fed eventually enacts further monetary stimulus; ECB takes additional measures to deal

with sovereign debt and banking crisis in Europe. Monetary policy loosened in key EMs.

• Inflation rates in most of the developed world remain low but inflation expectations are raised

by central banks’ monetary easing and debt monetisation.

GOLD

US DOLLAR GOLD PRICE

200-day moving average

US$/oz

Source: Thomson Reuters GFMS

US$/oz Average YoY Intra-period

2010 1,224.52 25.9% 25.3%

2011 1,571.64 28.3% 10.3%

Jan- 16th Mar2012

1,695.58 23.1% 3.8%

GOLD TOTAL SUPPLY

Source: Thomson Reuters GFMS

FABRICATION DEMAND

Source: Thomson Reuters GFMS

GOLD SUPPLY & FABRICATION DEMAND

Fabrication (excluding coins)

Supply (mine production + scrap)

Source: Thomson Reuters GFMS

WORLD INVESTMENT

Value

Source: Thomson Reuters GFMS

NET OFFICIAL SECTOR SALES/PURCHASES

Source: Thomson Reuters GFMS

Net Sales

Net Purchases

OUTSTANDING DELTA ADJUSTED PRODUCERS HEDGE POSITION

Source: Thomson Reuters GFMS

2012 GOLD PRICE FORECAST

High $2005

Average$1778

Low$1580

Source: Thomson Reuters GFMS

SILVER

US DOLLAR SILVER PRICE

Source: Thomson Reuters GFMS

US$/oz Average YoY Intra-period

2010 20.19 37.6% 78.4%

2011 35.12 73.9% -8.1%

Jan-16th Mar 2012

32.71 6.0% 12.1%

GOLD:SILVER RATIO AND SILVER PRICE (MONTHLY AVERAGES)

SILVER TOTAL SUPPLY

Source: Thomson Reuters GFMS

SILVER FABRICATION DEMAND

Source: Thomson Reuters GFMS

GROWING SILVER MARKET “SURPLUS”

DEMAND (fabrication excluding coins)

SUPPLY (mine production + scrap)

Source: Thomson Reuters GFMS

SILVER WORLD INVESTMENT

Value

Source: Thomson Reuters GFMS

2012 SILVER PRICE FORECAST

High$45.05

Average$34.35

Low$26.85

Source: Thomson Reuters GFMS

PLATINUM

US DOLLAR PLATINUM PRICE

Source: Thomson Reuters GFMS

US$/oz Average YoY Intra-period

2010 1,609.39 33.7% 17.0%

2011 1,721.87 7.0% -22.8%

Jan-16th Mar 2012

1,600.85 -11.3% 19.3%

PLATINUM-GOLD PREMIUM/DISCOUNT (weekly averages)

Source: Thomson Reuters GFMS * Calculated using 60-day rolling correlations

PLATINUM TOTAL SUPPLY

Tonnes

Source: Thomson Reuters GFMS

PLATINUM FABRICATION DEMAND

Tonnes

Source: Thomson Reuters GFMS

Source: Thomson Reuters GFMS

AUTOCATALYST DEMAND vs VEHICLES PRODUCTION

Source: Thomson Reuters GFMS

PLATINUM MARKET IN LARGE GROSS “SURPLUS”

Supply(Mine Production + Scrap)

Fabrication Demand

PLATINUM INVESTMENT – ETFs & Futures

2012 PLATINUM PRICE FORECAST

Source: Thomson Reuters GFMS

High$1,885

Average$1,620

Low$1,405

PALLADIUM

US DOLLAR PALLADIUM PRICE

Source: Thomson Reuters GFMS

US$/oz Average YoY Intra-period

2010 525.48 99.6% 89.3%

2011 732.88 39.5% -18.9%

Jan-16th Mar2012

684.61 -14.5% 5.9%

PALLADIUM’S CORRELATION WITH PLATINUM

Source: Thomson Reuters GFMS * Calculated using 60-day rolling correlations

PALLADIUM TOTAL SUPPLY

Tonnes

Source: Thomson Reuters GFMS

PALLADIUM FABRICATION DEMAND

Tonnes

Source: Thomson Reuters GFMS

Source: Thomson Reuters GFMS

PALLADIUM MARKET IN SMALL GROSS “DEFICIT“

Supply(Mine Production + Scrap)

Fabrication Demand

PALLADIUM INVESTMENT – ETFs & futures

PLATINUM AND PALLADIUM ABOVE GROUND STOCKSA useful explanation why platinum costs more than palladiumAs stock levels converge, so too over time should prices.

2012 PALLADIUM PRICE FORECAST

Source: Thomson Reuters GFMS

High$860

Average$735

Low$590

DISCLAIMER

The information and opinions contained in this presentation have been obtained from sources believed to be reliable, but no representation, guarantee, condition or warranty, express or implied, is made that such information is accurate or complete and it should not be relied upon as such. Accordingly, Reuters Ltd accepts no liability whatsoever to the people or organizations attending this presentation, or to any third party, in connection with the information contained in, or any opinion set out or inferred or implied in, this presentation. This presentation does not purport to make any recommendation or provide investment advice to the effect that any precious metals 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 precious metals or any precious metals related products. Expressions of opinion are those of Reuters Ltd only and are subject to change without notice.