CPM Gold Yearbook 2011
44
CPM Gold Yearbook 2011 29 March 2011 29 March 2011 Bloomberg New York h 30 Broad Street, 37 th Floor New York, NY 10004 www.cpmgroup.com
Transcript of CPM Gold Yearbook 2011
CPM Gold Yearbook 2011
29 March 201129 March 2011Bloomberg
New York
h30 Broad Street, 37th FloorNew York, NY 10004www.cpmgroup.com
CPM Gold Yearbook 2011 Sponsorsp
Agenda: Speakersg pJeffrey Christian, Managing Director
Review and OutlookReview and OutlookInvestment DemandChina’s Gold Market
Carlos Sanchez, Director of Risk Management
Official Transactions
Erica Rannestad, Commodity Analyst
Supplyb i i dFabrication Demand
Markets Prices
Gold PricesGold PricesWeekly Average London PM fix by London bullion dealers, through 18 March 2011
$/Ounce $/Ounce
1,200
1,300
1,400
1,500
1,200
1,300
1,400
1,500
800
900
1,000
1,100
800
900
1,000
1,100
400
500
600
700
400
500
600
700
0
100
200
300
0
100
200
300
69 71 73 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 1069 71 73 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 10
Intermediate Term Gold Recommendations
1,4001,400$/Oz. $/Oz.
CPM Group's Intermediate Term Gold Recommendations
1,000
1,200
1,000
1,200
S
600
800
600
800S
S
S
400
600
400
600 SS
0
200
0
200
80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10
B B B B B
80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10
The Economic Outlook
1212Percent
Real Gross Domestic ProductAnnual, Projected Through 2015
Percent
8
10
12
8
10
12World Emerging Economies Advanced Economies
2
4
6
2
4
6
-2
0
-2
0
-6
-4
-6
-4
90 92 94 96 98 00 02 04 06 08 10 12p 14p
Average Global GDP = 4.0%Average Global GDP = 3.0% Average GDP =3.8%
Source: IMF World Economic Outlook, January 2011 & October 2010
Investment Demand
Net Investment Demand and Prices Projected through 2011Net Investment Demand and Prices Projected through 2011
12060.0
Million Ounces Percent
80
100
40.0
50.0
Percent Change in Price
Net Investment Demand (left scale)
40
60
20.0
30.0
Percent Change in Price
0
20
0.0
10.0
-40
-20
-20.0
-10.0
66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10e
Note: Price Change through the end of 2010
Global Financial Assets
220220Investor Gold Holdings
Global Financial Assets
US$ Trillion US$ Trillion
160
180
200
160
180
200Investor Gold Holdings
Equity Securities
Private Debt Securities
G t D bt S iti
100
120
140
100
120
140
Government Debt Securities
Bank Deposits
60
80
100
60
80
100
0
20
40
0
20
40
80 90 95 00 01 02 03 04 05 06 07 08 09 10e
Gold as a Percent of Global Financial Assets
6%6%Percent Percent
Gold as a Percent of Global Financial Assets
5%5%
3%
4%
3%
4%
2%2%
0%
1%
0%
1%
1968 1980 1990 1995 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010e
There Are Many Myths That Surround Goldy y
Given gold’s historical role as a financial asset and a monetary asset, and the special place in mankind’s dreams occupied by gold, gold also is the subject of many belief
Correlations
Monthly
systems and superstitions that do not hold up to statistical scrutiny.
o t y
Gold Inflation TWD DJIA S&P T-Bill T-Bond
1970 - 2009 0.08 -0.28 -0.03 -0.05 -0.07 -0.11
2000 - 2009 -0.07 -0.41 -0.17 -0.12 -0.07 -0.17
2006 - 2009 -0.06 -0.45 -0.13 -0.11 0.00 -0.09
Note: TWD - Trade Weighted Dollar. 2008 Through December.
Source: CPM Group
Combined Gold Exchange Traded Fund HoldingsCombined Gold Exchange Traded Fund Holdings
70
75
70
75
AGOL GLTR CGL
Million OuncesMillion Ounces
50
55
60
65
50
55
60
65 India PHYS Xetra-Gold
GoldIst SGBS Dubai
NYSE ETF JB ETF
35
40
45
50
35
40
45
50 NYSE-ETF JB ETF
ZKB IAU JSE
GLD GBS GOLD
15
20
25
30
15
20
25
30 GTU CEF
0
5
10
0
5
10
Net Additions to Gold Exchange Traded FundsNet Additions to Gold Exchange Traded Funds
2525
Million Ounces Million Ounces
15
20
15
20
10
15
10
15
55
-5
0
-5
0
03 04 05 06 07 08 09 10 11
Note: 2011 data is the net reduction in combined gold ETF holdings on 15 March 2011 from 31 December 2010.
China’s Gold Market
Chinese Gold Supply and Demand Projected Through 2011pp y j g
2525Investment Demand
Fabrication Demand
Million Ounces Million Ounces
2020Gold Supply
1515
5
10
5
10
0
5
0
5
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010e 2011p
Gold Mine Production in China Projected Through 2011j g
14.014.0Million Ounces Million Ounces
10.0
12.0
10.0
12.0
6 0
8.0
6 0
8.0
4.0
6.0
4.0
6.0
0.0
2.0
0.0
2.0
1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010
Gold Mine Production and Secondary RecoveryProjected Through 2011
1616Secondary Recovery
Million Ounces Million Ounces
12
14
12
14Mine Production
8
10
8
10
4
6
4
6
0
2
0
2
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011p2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011p
Chinese Fabrication Demand Projected Through 2011Chinese Fabrication Demand Projected Through 2011
1616
D t l/M di l
Million Ounces Million Ounces
12
14
12
14
Dental/Medical
Electronics
Jewelry
8
10
8
10
4
6
4
6
0
2
0
2
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011p
Official Transactions
Official Gold Transactions
• The official sector added 10.22 million
Million Ounces Milli O
Official Transactions
ounces to its holdings in 2010
• The official sector10
20
30
10
20
30Million Ounces Million Ounces
Net Additions
• The official sector is projected to add between 8 and 12 million ounces gold hi
-10
0
10
-10
0
10
this year
40
-30
-20
40
-30
-20Net Reductions
-50
-40
-50
-40
60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 11p
20
A Closer Look at Official Gold Transactions
Million Ounces Million Ounces
Central Bank Changes In Gold Holdings 2004 - 2010
Million Ounces Million Ounces
Central Bank Changes In Gold Holdings in 2009 – 2010Excludes China's Purchases, Indian and IMF Transactions
20
25
30
20
25
30
Gross Additions
4.5
5.0
5.5
6.0
4.5
5.0
5.5
6.0
Gross Additions
5
10
15
5
10
15Net Additions/Reductions
2.5
3.0
3.5
4.0
2.5
3.0
3.5
4.0
Net Additions/Reductions
-5
0
5
-5
0
5
0.5
1.0
1.5
2.0
0.5
1.0
1.5
2.0
-20
-15
-10
-20
-15
-10
04 05 06 07 08 09 10
Gross Reductions
-1.5
-1.0
-0.5
0.0
-1.5
-1.0
-0.5
0.0
J M M J l S N J M M J l S N
Gross Reductions
04 05 06 07 08 09 10 Jan Mar May Jul Sep Nov Jan Mar May July Sep Nov
Monetary Reserves – Gold Reserves and Foreign Exchange Holdingsy g g g
3.0Trillion $
Foreign Exchange Reserves and Gold Reserves in U.S. Dollars
100%
Gold Reserves as a Percentage of Total Monetary Reserves
2.5
70%
80%
90%
1.5
2.0
40%
50%
60%
70%
0.5
1.0
10%
20%
30%
40%
0.0
Chi
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Rus
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Ara
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Tai
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Indi
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Bra
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Hon
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Switz
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Ger
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Indo
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Den
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Phili
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Uni
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Stat
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Ital
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Bed
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Sing
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Sa U S U
Uni
te S Sa
Official Foreign Exchange Reserves & Central Bank Gold Holdings in Developed & Developing Economies
1010US$ Trillion US$ Trillion
Official Foreign Exchange Reserves
1 2001 200Million Ounces Million Ounces
Central Bank Gold Holdings
g p p g
8
9
10
8
9
10
900
1,000
1,100
1,200
900
1,000
1,100
1,200
Developing Economies
5
6
7
5
6
7
Developed Economies600
700
800
600
700
800
Developing Economies
2
3
4
2
3
4
300
400
500
300
400
500Developed Economies
0
1
0
1
95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10
Developing Economies0
100
200
0
100
200
95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11p
Source: IMF Statistics Department COFER database and International Financial Statistics
Official Transactions and Net Private Investment
Million Ounces Million Ounces
Official Transactions and Net Private Investment Demand • Official sector net gold additions
30
40
50
30
40
50Official Transactions
Net Private Investment
Net Additions
coupled with high levels of investment demand should help support prices
10
20
30
10
20
30 pp p
• Over the past two years both official
ddi i d
-10
0
-10
0
Net Reductions
sector additions and investment demand have added to more than 40 million
-30
-20
-30
-20
77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11p
ounces per year
Supply and Demand
Total Gold Supply Projected Through 2011Total Gold Supply Projected Through 2011
120
130
120
130
Million Ounces Million Ounces
90
100
110
120
90
100
110
120
Secondary Supply
60
70
80
60
70
80Transitional Economies
30
40
50
30
40
50
Other Mine Production
0
10
20
0
10
20
73 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11p
South African Mine Production
73 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11p
Global Gold DiscoveriesGlobal Gold Discoveries
350
400
350
400Million Ounces Million Ounces
250
300
350
250
300
350
150
200
250
150
200
250
50
100
150
50
100
150
0
50
0
50
50 52 54 56 58 60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08
Source: Richard Schodde, MD MinEx Consulting, as reported in Gold Fields presentation to Diggers & Dealers in Kalgoorlie in August 2010., g, p p gg g gNote: Includes byproduct gold sources. 'Other Estimates' includes resource estimates for deposits found since 2004 but not yet reported or full delineated.
Estimated Total Global Exploration Spendingp p gProjected Through 2011
1,40018
US$ Billion $/Ounce
1,100
1,200
1,300
14
16
800
900
1,000
8
10
12
Gold Price (RHS)
500
600
700
4
6
8
200
300
400
0
2
89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10e 11p
Allocated to Gold
89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10e 11pSource: MEG, CPM Group
Average Grade of Gold Mined
1414
Grams/Metric Tons Grams/Metric Tons
Average Grade of Gold Mined
10
12
10
12Average Grade of Gold Mined in USA + Canada + Australia + South Africa
88
4
6
4
6
0
2
0
2
Average Grade of Gold Mined in the World
51 53 55 57 59 61 63 65 67 69 71 73 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09
Global Mining Capital ExpenditureGlobal Mining Capital Expenditure140140
Billion $ Billion $
100
120
100
120
8080
40
60
40
60
0
20
0
20
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10e
The Price of Gold and Cash Operating Costs of Productionp g
1,300
1,400
1,300
1,400$/Ounce$/Ounce
1,000
1,100
1,200
1,000
1,100
1,200Gold Price
700
800
900
700
800
900
400
500
600
400
500
600
C h C t
Production Cost
100
200
300
100
200
300Cash Cost
02 03 04 05 06 07 08 09 10
Gold Cash Costs in Third Quarter 2010Q
$2,400
$2,600
$2,400
$2,600Cash Cost /Ounce Cash Cost /Ounce
$1,800
$2,000
$2,200
$1,800
$2,000
$2,200
$1,200
$1,400
$1,600
$1,200
$1,400
$1,600
Annual Average Gold Price in 2010 Q3 = $1,227.64
$600
$800
$1,000
$600
$800
$1,000
$0
$200
$400
$0
$200
$400 Weighted Average Cash Cost = $550.11
1% 14% 20% 34% 40% 47% 55% 64% 70% 76% 82% 85% 88% 91% 95% 98%
Margin between Gold Price and Cash CostsMargin between Gold Price and Cash Costs
650
700
650
700
$/Ounce $/Ounce
500
550
600
650
500
550
600
650
350
400
450
350
400
450
150
200
250
300
150
200
250
300
0
50
100
0
50
100
79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10e79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10e
Estimated Gold Production AdditionsEstimated Gold Production Additions
2525
Million Ounces Million Ounces
2020
1515
5
10
5
10
0
5
0
5
2011 2012 2013 2014 20152011 2012 2013 2014 2015
Annual Gold Recovery and Average London Gold Price y gProjected Through 2011
1,50075
Million Ounces $/Ounce
1,100
1,200
1,300
1,400
55
60
65
70
700
800
900
1,000
35
40
45
50
Scrap
400
500
600
700
20
25
30
35
0
100
200
300
0
5
10
15Prices (right scale)
77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11p
Total Fabrication Demand Projected Through 2011Total Fabrication Demand Projected Through 2011
120120
Million Ounces Million Ounces
90
100
110
90
100
110Other
Jewelry, Developed Countries
60
70
80
60
70
80
Electronics
Dental
30
40
50
30
40
50Dental
0
10
20
0
10
20 Jewelry, Developing Countries
77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11p
Jewelry Demand Projected Through 2011Jewelry Demand Projected Through 2011
120120
Developing Countries
Million Ounces Million Ounces
100100
p g
Developed Countries
60
80
60
80
4040
0
20
0
20
77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11p
Markets
The Gold Market
9 000
10,000Million Ounces
7,000
8,000
9,000London Bullion Market Clearing Volume
5,000
6,000
Physical Market Flow
Futures & Options Exchanges' Trading Volume
2 000
3,000
4,000
0
1,000
2,000
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Trading Volumes in the Futures Marketsg6,0006,000
Million Ounces Million Ounces
4,000
5,000
4,000
5,000
3,000
,
3,000
,
2,0002,000
0
1,000
0
1,000
75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09
Prices
Gold Price Seasonalityy
101.5101.5
Monthly Gold Price Seasonality
Seasonal Strength Seasonal Strength
100 0
100.5
101.0
100 0
100.5
101.0
99.0
99.5
100.0
99.0
99.5
100.0
98.0
98.5
98.0
98.5
96.5
97.0
97.5
96.5
97.0
97.5
96.596.5Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
London Gold Prices since 1700 Base Year = 2010London Gold Prices since 1700 Base Year 2010
6,0006,000$/Ounce $/Ounce
4,000
5,000
4,000
5,000
3,000
,
3,000
,
Real
2,0002,000
0
1,000
0
1,000
Nominal
1700 1750 1800 1850 1900 1950 2000
Thank YouCPM Yearbooks 2011
Please visit the CPM Store, via www.cpmgroup.com, to purchase this year’s l b k
*This year’s Yearbooks feature a special section on China’s precious metals markets
Precious Metals Yearbooks.
