Gold Investment Symposium 2012 - Frederic Panizzutti - PAMP

Frederic Panizzutti
Global Head of Sales

MKS Group: PowerPoint Presentation – 2010 CONFIDENTIAL info@mks.ch / www.mks.ch – info@pamp.com / www.pamp.com
1

MKS PRODUCTS AND SERVICES

2

MKS GROUP IN THE WORLD

Netherland

Switzerland
USA Turkey
China
UAE Thailand
India
Singapore
Vietnam
Malaysia

Australia

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CONTENT

o History
o The Bretton Woods Years
o The post Bretton Woods Years
o The Era of Terror & «Washington Accord»
o The Credit Crunch and Crisis

o Modern Times
o Why Gold?
o Trends & Demand
o Gold Price

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HISTORY

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THE 3 MAJOR PHASES FOR GOLD
BRETTON WOOD YEARS
MONETARY GOLD 1944 -1975

 July 1944: The Bretton Woods conference fixes the Gold price at 35 $/oz
 December 1945: The IMF, when founded takes over the gold price reference at 35 $/oz and requires
25% of initial subscriptions to be paid in gold, amounting a total of 4894 tonnes in 1975
 November 1961: Creation of the Gold Pool to protect the $-Gold parity set by Bretton Woods & IMF
 March 1968: Abolition of the Gold Pool and USD/Gold parity. The IMF created the SDR by taking
over the value of 0.888571 per share
 August 1971: The USD/Gold parity and convertibility is abolished
 August 1975: The IMF decided to auction 800t of Au and to restitute part of its holding to members
 Between 1945 -1970 the parity of monetized gold against the USD will be defended and its
exchange rate remains stable

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BRETTON WOOD YEARS

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BRETTON WOOD YEARS

 January 1975: The United States start to sell gold

 June 1976: The IMF starts to auction gold

 April 1978: The IMF decides that gold does not anymore play a role in the
international monetary system

 November 1979: The United States finishes its gold sales

From 1975 to 1979, 17 mio ounces (530 tones) of gold sold by the USA

 May 1980: IMF finishes its gold sales for a total of 25 mio ounces sold (778 tones) in a price range
from 109 to 712 $/oz

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THE ABOLITION OF BRETTON WOOD
DEMONETIZED GOLD 1975 – 1999

 The Islamic Revolution in Iran, the Soviet invasion of Afghanistan and the oil shock - Inflation

 The price of gold moves from 35 to 800 dollars an ounce within a few years. Volatile prices and
mitigated trends led to a drop in the price of gold towards 300 in 1982. Subsequently the price
recovered and gold reached USD 500 in 1983, to again decline to 300 in 1985 to reach USD 500 by
on more time in 1987

 The market went through a long and painful period of declining prices marked by multiples and
unpredictable gold sales by the official sector the central banks

 The price below USD 300 level to 252 $/oz, Summer 1999

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DEMONETIZED GOLD 1975 – 1999

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YEARS OF TERROR AND THE WASHINGTON AGREEMENT
SAFE HAVEN GOLD - 1999 - 2006

 The European Central Bank member countries plus those of Switzerland, Sweden and The UK
announced to limit their sales to 400 tones annually from September 1999 to September 2004, 2,000
tones in all.
 They also agreed not increasing their gold leasing, nor any positions in futures and options
 The market reacts immediately the price of gold jumps within a few days above the important USD
300 level and moves up gradually to reach USD 430 an ounce by January 2004
The confidence is re-established
 Sales by the official sector is not a dominant factor anymore
 26 September 1999: Washington Central Banks Accord announced
 11 September 2001: Twin Towers Tragedy in New York
 07 October 2001: Afghanistan military invasion
 18 March 2003: Iraq military invasion

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GOLD IN USD PER OUNCE
SAFE HAVEN GOLD 1999 - 2008

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GOLD IS RE-BORN
THE CONFIDENCE COME-BACK

 The «Washington Agreement» announced in September 1999 allowed the market to regain
confidence and to position itself without any fears of new, non-anticipated sales, by the official sector

IN A CONTEXT

 of permanent fears over new sweeping terrorist activities

 of the relative fragility of the US dollar and the volatile exchange
markets

 of economic uncertainty in the short term

 The confidence is re-established allowing a durable recovery in the price of gold in the medium-term

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THE CREDIT CRUNCH AND CRISIS
REMONETIZED GOLD? – 2009

 February 2007 – HSBC writes-down subprime
by 10.5 BN

 End of 2007 – Merrill Lynch’s and Citigroup’s
CEOs resign

 Profits at the US depository institutions
decline 98%

 Gold does not yet react – markets focused on
securing assets

 Funds forced to close positions – mainly in
commodities

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REMONETIZED GOLD? – 2009

GOLD:

 Physical gold in demand in the west reaches record levels

 Eastern countries take opportunity of higher prices

 Major geographical shift of Gold from the East to the West

 Refiners busy 24h a day

 Physical gold is again the benchmark in the market

 The private sector is creating its own informal gold standard

 Investors are not looking anymore at the return on their capital but at the return of their invested
capital

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REMONETIZED GOLD 2009

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MODERN TIMES

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THE GLOBAL CRISIS

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GOLD - GOOD DELIVERY PAMP BARS

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FROM THE EAST TO THE WEST

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WHY GOLD?

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GOLD AS AN INVESTMENT ALTERNATIVE
WHY INVEST INTO GOLD?

 Smart Money vs. Big Money

 Gold’s negative correlation with stocks and
bonds in the case of a sudden crisis

 Gold as a short-term hedge against
geopolitical and terrorist crisis

 Gold as long-term hedge against economic
inflationary and deflationary crisis

 Gold as a hedge against a weakening US
dollar

 Gold as a safe haven value

AND

 Gold as a rising investment

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GOLD AS AN INVESTMENT ALTERNATIVE
WHY INVEST INTO GOLD?

 Physical Gold as a Universal value

 Physical Gold is a liquid "commodity”, it knows no borders, it is recognized and can be
bought and sold throughout the world

 Physical Gold is not a liability to anyone else, it only belongs to YOU

 Physical Gold a timeless and non-perishable commodity

 Physical gold as a hedge to local currency depreciation

 Physical Gold has a lot of value for little space

 Physical Gold is easily convertible into all major currencies

 Physical Gold used as a cover against domestic inflation

 Physical Gold is great as a hedge against depreciation of local ccys

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CASE STUDY – GOLD AS A LAST RESORT ASSET

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TRENDS

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26

TRENDS &
DEMAND


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PHYSICAL GOLD

Physical Supply Physical demand


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GOLD SUPPLY 2011

Russia
Other CIS 211.9 26.9
Europe
134.9 7.8
18.5 388.7
North America

338.9 165.5
Middle East
23.9 299.3 China
371 146.1

West Africa India
379.2 47.3 2.4 57.5 Other APAC
269.2 333.7

South America
582.1 141 South Africa Oceania
194 - 273.5 3.4

Key: Tons
Mine productionGroup: PowerPoint Presentation – 2010 info@mks.ch / www.mks.ch – info@pamp.com / www.pamp.com
MKS CONFIDENTIAL
Gold scrap
29

GOLD DEMAND 2011

Russia
Other 61.8
CIS
Europe
North 25.6
America 602.2
China
222.1
Middle 825.8
West East
Africa 388.5
India
15.6 Other
1045 Asia
Pacific
South 640.4
America

63.3 Oceania
South
Africa 20.2

27.8

Key:
Tons 30

GOLD PRICE


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32

HARD CURRENCY

“Hard currency in
economics, refers to a
globally traded currency
that is expected to serve
as a reliable and stable
store of value”


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COMMODITY BULL MARKETS
HISTORY REPEATS ITSELF This could also be at
the end of History,

1908 - 1923

1933 - 1951

1968 - 1982

1999 – Ongoing


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PRECIOUS METALS FORECASTS
MKS PM PRICE FORECASTS 2012 – PUBLISHED ON 01 JAN 2012

GOLD
HIGH 2012: 1900.00 USD/OZ
LOW 2012: 1540.00 USD/OZ
AVERAGE 2012: 1720.00 USD/OZ

SILVER
HIGH 2012: 42.00 USD/OZ
LOW 2012: 26.37 USD/OZ

PLATINUM
HIGH 2012: 1790.00 USD/OZ
LOW 2012: 1385.00 USD/OZ

PALLADIUM
HIGH 2012: 730.00 USD/OZ
LOW 2012: 564.00 USD/OZ

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Thank You!

MKS GROUP
FREDERIC PANIZZUTTI
fpanizzu@MKS.CH

Disclaimer: Although the informationPresentation – 2010 been obtained from and is based upon sources MKS believes to be reliable, we do not guarantee/ its accuracy– and it may be incomplete or condensed. All
MKS Group: PowerPoint in this report has CONFIDENTIAL info@mks.ch www.mks.ch info@pamp.com / www.pamp.com
opinions and estimates constitute MKS' judgment as of the date of this report and are subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation for
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the purchase or sale of an investment. This report does not consider or take into account the investment objectives or financial situation of a particular party.

Gold Investment Symposium 2012 - Frederic Panizzutti - PAMP

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