1 FINEX ’10 Burlington House, London 28 th October 2010.
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1 FINEX ’10 Burlington House, London 28 th October 2010
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Transcript of 1 FINEX ’10 Burlington House, London 28 th October 2010.
1
FINEX ’10
Burlington House, London
28th October 2010
2
Equity indices vs gold price
3
Equity indices vs the gold price (YTD)
4
Value of in-situ gold - selected markets, Jan & Oct 2010
Inferred Indicated Measured Total
London – Jan
– Oct
3.785.46
85.94106.24
403.53355.03
120.73123.61
Toronto – Jan – Oct
62.0184.62
243.76175.19
283.68279.33
196.90171.36
Sydney – Jan – Oct
91.4744.62
143.43214.99
738.55558.63
191.75202.89
Wt mean – Jan – Oct
33.6543.56
158.55113.17
339.90315.35
158.56145.62
JHB – Jan – Oct
36.27 53.14 156.08 36.27
5
Cost of discovery of gold resources (Jan 2010) vs value (Oct 2010)
Inferred Indicated Measured Total
London – Jan
Value – Oct
6.805.46
12.53106.24
46.55355.03
8.31123.61
Toronto – JanValue – Oct
10.1884.62
13.70175.19
34.47279.33
12.26171.36
Sydney – Jan Value – Oct
4.5044.62
5.27214.99
29.43558.63
5.86202.89
Mean – JanValue – Oct
7.1643.56
10.50113.17
36.82315.35
8.81145.62
JHB – Jan – Oct
0.90 1.26 4.18 0.90
6
Value of in-situ gold - selected markets (explorers only)
Inferred Indicated Measured Total
London – Oct
– Apr
vs total market
5.462.455.46
14.0925.76106.24
366.02309.79355.03
82.3875.52123.61
Toronto – Oct
– Apr
vs total market
84.6256.8584.62
75.6072.48175.19
-79.16-81.14279.33
42.5531.65171.36
Sydney – Oct
– Apr
vs total market
44.6247.7844.62
213.76221.36214.99
-27.66-32.39558.63
116.65125.44202.89
7
Theoretical gold explorer, resource profile with exploration
Year 0 Year 1 Year 2 Year 3
Measured 0 0 0 23.7
Indicated 0 0 56.8 44.7
Inferred 0 100 43.2 31.6
8
Theoretical exploration company (three markets, three values)
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
Year 1 Year2 Year 3 Year 4
Val
ue (U
S$)
London value (US$) ASX value (US$) TSX value (US$)
Value of ‘total’ exploration oz w.r.t. the gold price (Jul-Oct)
9
TSX ASXLondon
0
10
20
30
40
50
60
1150 1200 1250 1300 1350 1400
0
10
20
30
40
50
60
70
80
90
100
1150 1200 1250 1300 1350 1400
0
20
40
60
80
100
120
140
1150 1200 1250 1300 1350 1400
Value of ‘inferred’ exploration oz w.r.t. the gold price (Jul-Oct)
10
TSX ASXLondon
0
20
40
60
80
100
120
140
160
180
200
1150 1200 1250 1300 1350 1400
0
5
10
15
20
25
30
1150 1200 1250 1300 1350 1400
0
10
20
30
40
50
60
70
1150 1200 1250 1300 1350 1400
Value of ‘indicated’ oz w.r.t. the gold price (Jul-Oct)
11
TSX ASXLondon
0
10
20
30
40
50
60
70
80
90
1150 1200 1250 1300 1350 1400
0
2
4
6
8
10
12
14
16
18
1150 1200 1250 1300 1350 1400
0
50
100
150
200
250
1150 1200 1250 1300 1350 1400
Value of ‘measured’ oz w.r.t. the gold price (Jul-Oct)
12
TSX ASXLondon
-120
-100
-80
-60
-40
-20
0
1150 1200 1250 1300 1350 1400
0
50
100
150
200
250
300
350
400
450
1150 1200 1250 1300 1350 1400
-60
-40
-20
0
20
40
60
80
100
120
140
1150 1200 1250 1300 1350 1400
Conclusion
Rising gold price environment• Buy London ‘inferred’
exploration oz
• Buy Australian ‘indicated’ and ‘inferred’ exploration oz
• Buy London ‘measured’ exploration oz
Falling gold price environment• Buy Australian ‘inferred’
exploration oz
• Buy London or TSX ‘indicated’ and ‘inferred’ exploration oz
• Buy Australian ‘measured’ exploration oz
13
14
Ben Bernanke
“Like gold, US dollars have value only to the extent that they are strictly
limited in supply. But the US government has a technology called a printing press that allows it to print
as many dollars as it wishes at essentially no cost"
15
Alan Greenspan
“But I see inflation as the greater future challenge. If political pressures prevent central banks from
reining in their inflated balance sheets in a timely manner, statistical analysis suggests the
emergence of inflation by 2012; earlier if markets anticipate a prolonged period of elevated money
supply.”
16
In both the 1970s and the 2000s….
• Twin deficits led to…• A weak dollar and rising oil prices,
which led to…• Inflation, to which…• The authorities reacted by raising
interest rates, which caused…• A financial crisis, which…• Halved the Dow and…• Threatened deflation, to which…• The world’s monetary authorities
reacted by adopting an excessively stimulative monetary policy, which…
• Led to inflation (albeit on a different timescale).
0
200
400
600
800
1000
1200
19
70
19
72
19
74
19
76
19
78
19
80
0.02.04.06.08.010.012.014.0
Gold price (US$/oz) DJIA US CPI (Dec-Dec, %)
02,0004,0006,0008,000
10,00012,00014,000
2000
2002
2004
2006
2008
0.0
1.0
2.0
3.0
4.0
5.0
Gold price (US$/oz) DJIA US CPI (%)
17
US CPI, 1965-2008
US CPI, percent change, 1965-2007
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
18
Revised assessment
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
1913 1923 1933 1943 1953 1963 1973 1983 1993 2003 2013 2023 2033
US$/oz
Gold price inflated at US CPI from $35/oz on 30th Jan. 1934 Nominal gold price (US$/oz)
