1

Section I. Macro

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

$1,800

$2,000

2000 2002 2004 2006 2008 2010 2012 2014

-5%

-4%

-3%

-2%

-1%

0%

1%

2%

3%

4%

5%Fig.1. Gold and US Real Rates

US Real Rates

Gold Price

Source: Bloomberg

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

$4,500

1995 1999 2003 2007 2011

Fig.2. Fed Balance Sheet ($B)

Source: Bloomberg

-3%

-2%

-1%

0%

1%

2%

3%

4%

2000 2002 2004 2006 2008 2010 2012 2014

€ 0

€ 200

€ 400

€ 600

€ 800

€ 1,000

€ 1,200

€ 1,400

€ 1,600 Fig.3. Gold and ECB Real Rates

Gold

ECB Real Rates

Source: Bloomberg

€ 0

€ 500

€ 1,000

€ 1,500

€ 2,000

€ 2,500

€ 3,000

€ 3,500

1999 2003 2007 2011

Fig.4. ECB Balance Sheet (€B)

Source: Bloomberg

￥0

￥2,000

￥4,000

￥6,000

￥8,000

￥10,000

￥12,000

￥14,000

2000 2002 2004 2006 2008 2010 2012 2014

-5%

-4%

-3%

-2%

-1%

0%

1%

2%

3%

4%

5%Fig.5. Gold and PBC Real Rates

PBC Real Rates

Gold

Source: Bloomberg

￥0

￥5,000

￥10,000

￥15,000

￥20,000

￥25,000

￥30,000

￥35,000

2003 2005 2007 2009 2011 2013

Fig.6. PBC Balance Sheet (CNY B)

Source: Bloomberg

2

Section I. Macro

$4

$6

$8

$10

$12

$14

$16

2006 2007 2008 2009 2010 2011 2012 2013 2014

Fig.7. The Biggest 6 Central Bank Balance SheetsUS, UK, Japan, China, EU & Switzerland (US$T)

Source: Bloomberg

-5%

0%

5%

10%

15%

20%

25%

1970 1980 1990 2000 2010

Fig.9. US M1 YoY%

Source: Bloomberg

0%

5%

10%

15%

1970 1980 1990 2000 2010

Fig.10. US M2 YoY%

Source: Bloomberg

0%

5%

10%

15%

20%

1999 2001 2003 2005 2007 2009 2011 2013

Fig.11. ECB M1 YoY %

Source: Bloomberg

0%

2%

4%

6%

8%

10%

12%

1999 2001 2003 2005 2007 2009 2011 2013

Fig.12. ECB M2 YoY %

Source: Bloomberg

0%

5%

10%

15%

20%

25%

30%

35%

40%

1996 2000 2004 2008 2012

Hu

nd

red

s Fig.13. PBC M1 YoY %

Source: Bloomberg

0%

5%

10%

15%

20%

25%

30%

35%

1996 2000 2004 2008 2012

Fig.14. PBC M2 YoY %

Source: Bloomberg

$0

$10

$20

$30

$40

$50

1999 2003 2007 2011

$0

$500

$1,000

$1,500

$2,000

Tho

usa

nd

s

Fig.8. Gold and M2 (US$B; Fed, ECB, PBC)

Gold

M2

Source: Bloomberg

3

Section I. Macro

Fig.15. Inflation

US Euro Area China

Headline CPI 1.1 0.5 2.0

Core CPI 1.6 1.0 n/a

Shadowstats 8.9 n/a n/a

0%

5%

10%

15%

20%

25%

2013200920052001199719931989

Fig.20. Interest Expense as % of Total Government Outlays

Source: Bloomberg; US Treasury

$13

$14

$15

$16

$17

$18

2011 2012 2013 2014

Fig.18. The Debt Ceiling ($T)

Total Federal Debt

Debt Ceiling Limit

Source: Bloomberg

Source: Bloomberg, Shadow Government Statistics.As of 2/28/2014

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

5.0%

5.5%

6.0%

6.5%

7.0%

2000 2002 2004 2006 2008 2010 2012 2014

Fig.19. Average Annual Interest Rate on US Debt

Source: US Treasury, Meridian Macro.

$0

$5

$10

$15

$20

$25

1940 1950 1960 1970 1980 1990 2000 2010

Fig.16. US National Debt ($T)

Source: TreasuryDirect.gov, USDebtClock.org

120%

170%

220%

270%

320%

370%

1947 1957 1967 1977 1987 1997 2007

Fig.17. US Debt as % of GDP

Source: Bloomberg

4

Section I. Macro

-$20

$20

$60

$100

$140

$180

$220

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014

Fig.23. China Net Purchases Long-Term US Securities(annual US$B)

Source: US Treasury; MacroMavens, LLC

-$100

$400

$900

$1,400

$1,900

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Fig.21. Global Forex Accumulation (US$B, 12 month sum)

Source: Bloomberg; MacroMavens, LLC

-$100

$100

$300

$500

$700

1978 1983 1988 1993 1998 2003 2008 2013

Fig.22. Net Purchases of US Treasury Notes and Bonds by All Foreign Countries (US$B, 12 month sum)

Source: US Treasury; MacroMavens, LLC

5

Section II. Gold

19.6%21.8%

4.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

1934 1982 2013

Fig.25. Market Cap of Above Ground Gold as % of Total US Financial Assets

Source: Federal Reserve, World Gold Council

0

40

80

Oct-03 Oct-05 Oct-07 Oct-09 Oct-11 Oct-13

Mill

ion

s o

f O

un

ces

Fig.26. Gold Held by ETFs

All ETFS

SPDR Trust

Source: Bloomberg, Company Filings.

Fig.24. Gold Supply and Demand (tonnes)

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Supply

Mine production 2,591 2,592 2,478 2,550 2,481 2,476 2,409 2,584 2,739 2,827 2,848 3,019

Old gold scrap 835 944 829 886 1,107 956 1,217 1,672 1,723 1,669 1,626 1,371

Traditional supply 3,426 3,536 3,307 3,436 3,588 3,432 3,626 4,257 4,463 4,495 4,473 4,390

Net producer hedging (412) (279) (445) (86) (373) (444) (349) (252) (108) 10 (20) (50)

Official sector sales 545 617 497 662 367 484 236 30 - - - -

Total supply 3,559 3,874 3,359 4,012 3,582 3,472 3,513 4,034 4,355 4,505 4,453 4,340

Demand

Jewellery 2,680 2,522 2,673 2,707 2,283 2,405 2,187 1,760 2,017 1,972 1,908 2,198

Other 360 385 416 431 458 462 436 373 466 453 428 409

Total fabrication 3,040 2,907 3,089 3,138 2,741 2,867 2,623 2,134 2,483 2,425 2,336 2,603

Bar & coin retail investment 373 314 396 412 421 446 649 743 1,205 1,519 1,256 1,654

Official sector purchases - - - - - - - - 77 457 535 369

ETFs & similar 3 39 133 208 260 253 321 617 382 185 279 (881)

Implied net investment 143 614 (259) 254 160 (94) (80) 541 207 (81) 47 595

Total demand 3,559 3,874 3,359 4,012 3,582 3,472 3,513 4,034 4,355 4,505 4,453 4,340 Source: World Gold Council

6

Section II. Gold

Investment Adviser, 19.80% Broker, 5.20%

Private Banking, 3.20%

Pension Fund, 0.30%

Hedge Fund, 5.90%

Mutual Fund, 2.50%

Insurance Company,

0.20%

Non-Institutional,

69.80%

Fig.27. SPDR Gold Trust Ownership by Type

Source: FactSet

00 01 02 03 04 05 06 07 08 09 10 11 12 13

-600

-500

-400

-300

-200

-100

0

100

200

300

400

500

600 Fig.29. Central Banks Net Purchases (tonnes)

Source: World Gold Council

Fig.28. Notable Transaction in 2014

Country Tonnes Transaction

Russia 6.8 Purchase

Kazakhstan 3.5 Purchase

Turkey 21.9 Decrease Source: World Gold Council

8%

9%

10%

11%

12%

13%

14%

3/00 3/02 3/04 3/06 3/08 3/10 3/12

Fig.31. Gold as % of Total Reserves

Source: World Gold Council

29,500

30,000

30,500

31,000

31,500

32,000

32,500

33,000

33,500

34,000

2000 2002 2004 2006 2008 2010 2012

Fig.30 Central banks Holdings of Gold (tonnes)

Source: World Gold Council

7

Section II. Gold

0

20

40

60

80

100

2006 2007 2008 2009 2010 2011 2012 2013 2014

Fig.32. Web searches for "Gold Bubble"

Source: GoogleTrends

0

20

40

60

80

100

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Fig.33. Web searches for "Gold Investment"

Source: GoogleTrends

$0$200$400$600$800$1,000$1,200$1,400$1,600$1,800$2,000

-

20.00

40.00

60.00

80.00

100.00

2006 2007 2008 2009 2010 2011 2012 2013 2014

Fig.34. Bernstein's Daily Sentiment Index

DSI

Gold

Source Bloomberg, Bernstein's DSI

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

$1,800

$2,000

0

20

40

60

80

100

2006 2007 2008 2009 2010 2011 2012 2013 2014

Fig.35. Market Vane Bullish Consensus

Market Vane

Gold

Source Bloomberg, Market Vane

8

Section II. Gold

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

$1,800

$2,000

800

1000

1200

1400

1600

1800

2000

2006 2008 2010 2012 2014

Fig.36. Comex Gold Futures Open Interest (tonnes)

Open Interest

Gold

Source: Bloomberg-20%

80%

180%

280%

380%

480%

2000 2002 2004 2006 2008 2010 2012 2014

Fig.37. Gold vs Continuous Commodity Index

CCI Index

Gold

Source: Bloomberg

$500

$700

$900

$1,100

$1,300

$1,500

$1,700

$1,900

0%

20%

40%

60%

80%

100%

7/10 7/11 7/12 7/13

Fig.39. Commercial Net Shorts as % of Total Open Interest

Net Short/Open Interest

Gold

Source: Bloomberg; The McClellan Market Report

More Net Short

Less Net Short

$0

$500

$1,000

$1,500

$2,000

-1,000

-800

-600

-400

-200

0

200

400

600

800

1,000

2006 2007 2008 2009 2010 2011 2012 2013 2014

Fig.38. Comex Gold Futures Activity (tonnes)

Net Large Speculators

Net Hedgers/Commercials

Gold

Source: CFTC

0

20

40

60

80

100

120

0

1

2

3

4

5

6

2003 2005 2007 2009 2011 2013

Mill

ion

s o

f O

un

ces

Fig. 40. Registered COMEX Gold Stocks vs. Owners per Ounce

Registered Stocks

Owners per Ounce

Source: Bloomberg

9

Section III. Gold Mining Equities

0%

10%

20%

30%

40%

50%

60%

70%

1995 1997 1999 2001 2003 2005 2007 2009 2011 2013

Fig.41. XAU and HUI as a Ratio of Gold

HUI/GoldXAU/Gold

Source: FactSet

-$3,000

-$2,000

-$1,000

$0

$1,000

$2,000

$3,000

$4,000

1H

07

2H

07

1H

08

2H

08

1H

09

2H

09

1H

10

2H

10

1H

11

2H

11

1H

12

2H

12

1H

13

2H

13

1H

14

Fig.42. Net Fund Flows For Lipper's Equity Precious Metals Fund Universe ($M)

Source: Morningstar 1H14 - as of 2/28/14

$0

$2

$4

$6

$8

$10

$12

$14

$16

5/06 5/07 5/08 5/09 5/10 5/11 5/12 5/13

Fig.43. Market Cap of Van Eck Gold Equity ETFs ($B)

Source: FactSet

0

50

100

150

200

250

300

$0

$2

$4

$6

$8

$10

$12

$14

$16

$18

00 01 02 03 04 05 06 07 08 09 10 11 12 13

Fig.44. Equity Capital Issued by Gold Miners

$B of Equty Issued

# of Transactions

Source: RBC Capital Markets

10

Section III. Gold Mining Equities

-2%

0%

2%

4%

6%

8%

10%

02 03 04 05 06 07 08 09 10 11 12 13

Fig.45. Senior Producers Return On Capital

Source: FactSet. Universe: NEM, ABX, GG, KGC, AUY, NCM, AU, GFI, HMY

Est.

0%

10%

20%

30%

40%

50%

60%

70%

$0

$100

$200

$300

$400

$500

$600

05 06 07 08 09 10 11 12 13

Mill

ion

s

Fig.46. Average Cost of Acquisitions in the Gold Sector ($/Oz)

Acquisition Cost As Ratio of Gold Price

Source: RBC Capital Markets, Bloomberg.

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

$1,800

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Fig.47. Senior Producers Cash Costs and Margin ($/Oz)

Cash Margin

Cash Costs

Source: Bloomberg

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20122013

E2014

E

After Tax Cash Cost ($/oz) 209 210 253 311 363 413 552 738 661 814 987 1,100 1,270 1,137

Margin (%) 23% 32% 31% 24% 18% 32% 21% 15% 32% 34% 37% 34% 19% 27%

0%

5%

10%

15%

20%

25%

30%

35%

40%

$0

$500

$1,000

$1,500

$2,000

$2,500 Fig.48. Gold Mining Industry Production Costs

After Tax Cash Cost ($/oz)

Margin (%)

Source: Tocqueville Asset Management, FactSet.

11

Section III. Gold Mining Equities

Source: BMO Capital Markets

Fig.49. Gold Price Discounted by Market ($/Oz)

Fig.50. NAV Premiums – Senior & Intermediate Producers (N.A.)

Source: ScotiabankSource: Scotiabank

Fig.51. P/CF – Universe of Coverage AverageFig.52. Adjusted Market Cap per Oz of Resource

Divided by Gold Price

Source: BMO Capital Markets