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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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.
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