tocqueville gold gold monitor 3q12 · 2000 2002 2004 2006 2008 2010 2012 11 13 15 17 19 21 23 ......
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SECTION I: MACRO
Fig. 1: Gold and U.S. Real Rates Fig. 2: Fed Balance Sheet (US$B) Fig. 3: Gold in EUR and ECB Real Rates Fig. 4: ECB Balance Sheet (euro B) Fig. 5: Gold in RMB and Chinese Real Rates Fig. 6: PBoC Balance Sheet (RMB B)
TOCQUEVILLE ASSET MANAGEMENT, L. P.
GOLD MONITOR
0
500
1,000
1,500
2,000
00 02 04 06 08 10 12
-8
-4
0
4
8Gold
US Real Rates (Inverted)
0
1,000
2,000
00 02 04 06 08 10 12
-3
-2
-1
0
1
2
3Gold
ECB Real Rates (Inverted)
1,000
5,000
9,000
13,000
00 02 04 06 08 10 12
-6
-4
-2
0
2
4
6
GoldChinese Real Rates (Inverted)
0
1,000
2,000
3,000
4,000
94 97 00 03 06 09
0
10,000
20,000
30,000
40,000
02 04 06 08 10 12
0
1,000
2,000
3,000
4,000
99 02 05 08 11
2
Fig. 7: The Biggest 6 Central Bank Balance Sheets Fig. 8: Gold and M2 (US$T; Fed, ECB, PBoC)
Source: Bianco Research
Fig. 9: U.S. M1 (YoY %) Fig. 10: U.S. M2 (YoY %)
Fig. 11: ECB M1 (YoY %) Fig. 12: ECB M2 (YoY %)
Fig. 13: PBoC M1 (YoY %) Fig. 14: PBoC M2 (YoY %)
TOCQUEVILLE ASSET MANAGEMENT, L. P.
0
4
8
12
16
99 02 05 08 11 0
4
8
12
99 02 05 08 11
0
10
20
30
40
96 99 02 05 08 11
0
10
20
30
40
96 99 02 05 08 11
0
10
20
30
40
99 01 03 05 07 09 110
500
1,000
1,500
2,000
Combined M2 (LHS)
Gold (RHS)
-10
-5
0
5
10
15
20
25
70 75 80 85 90 95 00 05 100
5
10
15
70 75 80 85 90 95 00 05 10
3
Fig. 15: Inflation Fig. 16: Electrical Consumption
U.S.
(Aug) Euro area
(Aug) China (Aug)
Headline CPI 1.7% 2.6% 2.0%
Core CPI 1.9% 1.0% N/A
Shadowstats 9.3% N/A N/A Source: Mark Lundeen, Barron’s
Fig. 17: Total U.S. National Debt Outstanding (US$B)
Source: Meridian Macro Research, LLC Fig. 18: Average Annual Interest Rate Paid on Debt Fig. 19: Interest Expense on Debt
as a % of Total Government Outlays Source: Meridian Macro Research, LLC Source: Meridian Macro Research, LLC
TOCQUEVILLE ASSET MANAGEMENT, L. P.
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
1980 1984 1988 1992 1996 2000 2004 2008 2012
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 9
11
13
15
17
19
21
23
1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012
4
Fig. 20: Total Credit Market Debt as a % of GDP
Source: Ned Davis Research Fig. 21: The Debt Ceiling
Fig. 22: Quality Spread and Gold Source: Bianco Research
TOCQUEVILLE ASSET MANAGEMENT, L. P.
0%
2%
4%
99 03 07 110
1,000
2,000
Gold (RHS)
Moody's Seasoned Corp Aaa vs Baa (LHS)
5
Fig. 23: Global Forex Accumulation Fig. 24: Annualized Monthly Growth in
(12 month sum, $B) Treasury and Agency Holdings under Custody ($B)
Source: MacroMavens, LLC Fig. 25: China Net Purchases Fig. 26: China Recycling of LT U.S. Securities (Annual $B) Purchases of U.S. Securities as % Forex Accumulation Source: MacroMavens, LLC Source: MacroMavens, LLC
TOCQUEVILLE ASSET MANAGEMENT, L. P.
-50
0
50
100
150
200
99 00 01 02 03 04 05 06 07 08 09 10 11 12
-1,000
-500
0
500
1,000
1,500
00 01 02 03 04 05 06 07 08 09 10 11 12
-50%
0%
50%
100%
150%
200%
250%
99 00 01 02 03 04 05 06 07 08 09 10 11 12
-200
200
600
1000
1400
1800
04 05 06 07 08 09 10 11 12
6
SECTION II: GOLD Fig. 27: GFMS Gold Supply and Demand (tonnes)
Source: AngloGold Ashanti, GFMS
Fig. 28: Market Cap of Above Ground Gold/ U.S. Financial Assets Source: Tocqueville Asset Management
20%22%
8%
0%
10%
20%
30%
1934 1982 Q2'12
TOCQUEVILLE ASSET MANAGEMENT, L. P.
7
Fig. 29: Tonnes of Gold Held by Gold ETFs Fig. 30: Ownership of GLD by Type Source: World Gold Council Source: FactSet Research Systems Fig. 31: Central Banks Net Purchases (tonnes) Fig. 32: Notable Transactions in Q2 Source: World Gold Council Source: World Gold Council Fig. 33: Central Banks Holdings of Gold (tonnes) Fig. 34: Gold as a Percent of Total Reserves Source: World Gold Council Source: World Gold Council
Country Tonnes TransactionTurkey 34.6 Addition Russia 22.3 Purchased
Kazakhstan 5.4 PurchasedMexico 2.7 Purchased
TOCQUEVILLE ASSET MANAGEMENT, L. P.
0
500
1,000
1,500
2,000
2,500
3,000
04 05 06 07 08 09 10 11 12
GLD
Other
Non-institutional, 50.6%
Broker, 8.2%
Hedge Fund, 16.0%
Investment Adviser, 21.1%
Insurance Company, 0.1%
Mutual Fund, 2.7%
Pension Fund, 0.5%
Private Banking, 0.8%
-800
-600
-400
-200
0
200
400
600
01 02 03 04 05 06 07 08 09 10 11 12
29,000
30,000
31,000
32,000
33,000
34,000
00 01 02 03 04 05 06 07 08 09 10 11 12
1.0%
1.1%
1.2%
1.3%
1.4%
1.5%
1.6%
2000 2002 2004 2006 2008 2010 2012
8
Fig. 35: Emerging Asia’s Share of Gold Demand
Source: GMO, GFMS, World Gold Council, Bloomberg Fig. 36: Google Searches for: “Gold Bubble”
Fig. 37: “Gold Investment”
TOCQUEVILLE ASSET MANAGEMENT, L. P.
9
Fig. 38: Ned Davis Research Gold Sentiment Composite
Fig. 39: Hulbert Newsletter Gold Sentiment Index
TOCQUEVILLE ASSET MANAGEMENT, L. P.
10
Fig. 40: Market Vane Bullish Consensus
Source: Market Vane
Fig. 41: Bernstein’s Daily Sentiment Index Source: Bernstein’s DSI
TOCQUEVILLE ASSET MANAGEMENT, L. P.
40
50
60
70
80
90
100
06 07 08 09 10 11 12500
700
900
1,100
1,300
1,500
1,700
1,900
2,100Market Vane (LHS)
Gold (RHS)
0
20
40
60
80
100
06 07 08 09 10 11 11500
700
900
1,100
1,300
1,500
1,700
1,900
2,100DSI (LHS)
Gold (RHS)
11
Fig. 42: COMEX Gold Futures Fig. 43: COMEX Gold Futures
Open Interest (tonnes) Activity (tonnes) Fig. 44: Commercial Net Shorts Fig. 45: Gold
as a % of Open Interest vs. Continuous Commodity Index Source: The McClellan Market Report
TOCQUEVILLE ASSET MANAGEMENT, L. P.
-1,200
-800
-400
0
400
800
1,200
06 07 08 09 10 11 12500
900
1,300
1,700
2,100
Gold (RHS)
Net Hedgers/ Commercials (LHS)
Net Large Speculators (LHS)
800
1,200
1,600
2,000
06 07 08 09 10 11 12500
900
1,300
1,700
2,100
Open Interest (LHS)
Gold (RHS)
-100%
0%
100%
200%
300%
400%
500%
600%
00 01 02 03 04 05 06 07 08 09 10 11 12
Gold
CCI
12
SECTION III: MINING EQUITIES Fig. 46: XAU and HUI as a Ratio of Gold Fig. 47: GSA’s Gold Stocks’ Valuation Fig. 48: Net Fund Flows for Lipper’s Equity Precious Metals Fund Universe ($B)* Fig. 49: Market Cap of Van Eck Gold Equity ETFs ($B) Fig. 51: Cash Costs and Margin *Note: 2H12 figure is through August. Fig. 50: Gold Miners Dividend Payout Ratio*
*Universe includes: ABX, NEM, GG, AU, GFI, KGC, NCM, BVN, HMY , Source: Scotia Capital, GFMS AUY, AEM, IAG, CG, EGO, and GOLD
TOCQUEVILLE ASSET MANAGEMENT, L. P.
0%
10%
20%
30%
40%
50%
60%
70%
84 87 90 93 96 99 02 05 08 11
XAU/Gold
HUI/Gold
-2.0
-1.0
0.0
1.0
2.0
3.0
1H06
1H07
1H08
1H09
1H10
1H11
1H12
0
5
10
15
06 07 08 09 10 11 12
0%
20%
40%
60%
00 01 02 03 04 05 06 07 08 09 10 11 12E
13
Fig. 52: Total Cash Outflow ($/oz) Fig. 53: Returns on Capital* Note: Operating = Operating costs + Corporate costs + Exploration costs +Royalties; *Universe: ABX, NEM, GG, AU, GFI, KGC, NCM, BVN, Capital = Ongoing + Expansion capital; Other = Finance costs and Other cash outflows HMY, AEM, IAG, GOLD, HL, BGO, CBJ, GLG, LIHR, Source: Gold Fields MDG, PDG, HM, NDY, ASL Fig. 54: Average Discovery Cost ($/oz) Fig. 55: Equity Capital Issued by Gold Miners Source: Gold Fields, MinEx Consulting, MEG
Source: RBC Capital Markets, BMO Capital Markets Fig. 56: Cost of Acquisitions in the Gold Sector
Source: RBC Capital Markets, BMO Capital Markets
TOCQUEVILLE ASSET MANAGEMENT, L. P.
0%
4%
8%
12%
99 00 01 02 03 04 05 06 07 08 09 10 11 12E
$0
$10
$20
$30
$40
$50
00 01 02 03 04 05 06 07 08 09 100
5
10
15
20
00 01 02 03 04 05 06 07 08 09 10 11 120
50
100
150
$B of Equity Issued (LHS)
# of Financings (RHS)
0
100
200
300
400
00 01 02 03 04 05 06 07 08 09 10 11 120%
10%
20%
30%
40%
Acquisition Cost ($/oz; LHS)
Acquisition Cost as a Ratio of Gold (RHS)
14
Fig. 57: Gold Price Discounted by the Market Fig. 58: Consensus Forecast Gold Prices ($/oz) Source: Assorted N.A. Brokerage Research Source: BMO Capital Markets Fig. 59: NAV Premiums- Senior & Intermediate Producers (N.A.)
Source: BMO Capital Markets Fig. 60: P/CF – Senior Producers (N.A.)
Source: BMO Capital Markets
TOCQUEVILLE ASSET MANAGEMENT, L. P.
500
800
1,100
1,400
1,700
2,000
Yr 0 Yr 1 Yr 2 Yr 3 Yr 4 LT
2011
2010
2009
2007
2008
2012
15
John Hathaway Portfolio Manager and Senior Managing Director © Tocqueville Asset Management L.P. October 9, 2012 The information provided in this Appendix should not be construed as investment advice. No representation is made concerning the accuracy of cited data, nor is there any guarantee that any projection, forecast or opinion will be realized. References to stocks, securities or investments should not be considered recommendations to buy or sell. Past performance is not a guide to future performance. Securities that are referenced may be held in portfolios managed by Tocqueville or by principals, employees and associates of Tocqueville, and such references should not be deemed as an understanding of any future position, buying or selling, that may be taken by Tocqueville. We periodically reprint charts or quote extensively from articles published by other sources. When we do, we provide appropriate source information. The quotes and material that we reproduce are selected because, in our view, they provide an interesting, provocative or enlightening perspective on current events. Their reproduction in no way implies that we endorse any part of the material used or the investment recommendations that may be published on those sites.
TOCQUEVILLE ASSET MANAGEMENT, L. P.
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