Gold Fundamentals

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Gold Fundamentals Price OutlookBruce
AlwayMINEXMoscow, 07th October 2005
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(No Transcript)
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GFMS gratefully acknowledges the generous
support from the following companies for this
years Gold Survey and its two Updates
Commerzbank Global Precious Metals
www.pamp.com
Dubai Metals Commodities Centre
World Gold Council
www.standardbank.com
www.IBKCapital.com
www.commodities.sgcib.com
www.placerdome.com
TSL Jewellery Co. Ltd
ARY Refinery
www.natexiscm.com
www.tecnigold.com
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GFMS

• GFMS is the worlds leading precious metals
  research consultancy.
• Produce the standard supply/demand data on gold
  and silver used by the industry.
• Also provide data and information on platinum
  group metals, base metals and steel.
• 13 full time analysts plus 3 consultants
• Research team based in London, Moscow, Mumbai,
  Beijing and Perth
• Regular weekly, monthly, quarterly annual
  reports plus consultancy services across the
  precious and base metals.
• Clients include funds, commercial banks, central
  banks, governments, mining companies, traders,
  refiners and manufacturers.

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Presentation Outline

• Prices
• Demand
• Supply
• Summary Price Outlook

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Prices
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US Dollar Gold Price Weekly Averages
US/oz
Jan-Sep 2005 intra-year 10.6 Jan-Sep 2005
year-on-year 7.6
26-week moving average
Source GFMS
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Euro Gold PriceWeekly Averages
Jan-Sep 2005 intra-year 22.0 Jan-Sep 2005
year-on-year 4.7
Euro/oz
26-week moving average
Source GFMS
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Gold Prices in Different CurrenciesIndexed Daily
Series
Rand/Kg
Euro/oz
US/oz
Rupee/10g
Source GFMS
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Demand
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Gold Demand
Source GFMS
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Fabrication Winners and Losers
(Figures represent year-on-year change, i.e.
H1.05 less H1.04)
Indian S-C
Middle East
East Asia
North America
China
Other
Latin America
Europe
Source GFMS
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Indian Gold Fabrication
Gold Price
Forecast
Source GFMS
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World Investment
World Investment Bar Hoarding, Coins, Implied
Net (Dis)Investment
Forc
Source GFMS
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Gold Demand Forecasts for 2005
Source GFMS
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Supply
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Gold Supply
Source GFMS
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Mine Production Winners and Losers
(Figures represent year-on-year change, i.e.
H1.05 less H1.04)
Indonesia
Australia
China
Mali
Russia
Canada
Kyrgyzstan
South Africa
Source GFMS
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Major Western World Mines' Cash Costs
(in money-of-the-day terms)
Average Total Cash Costs 2004 250Q1.05 283Q2.0
5 272
Gold Price
South Africa
Australia
USA
Canada
Source GFMS
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CBGA and Other Gold Sales
Other
Forecast
CBGA
CBGA refers to signatories to the 1999 and 2004
Agreements
Other refers to all other countries
Source IMF, ECB and GFMS estimates
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Regional Changes in Scrap Supply2005.H1 compared
to 2004.H1
Europe
China
Other
North America
East Asia
Indian S-C
Middle East
Source GFMS
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Gold Supply Forecasts for 2005
Source GFMS
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Summary and Price Outlook
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Price Outlook 1

• Strong support for the price from fabrication
  demand and, to a lesser extent, producer
  de-hedging. Supply shock in first half from
  official sales absorbed.
• US dollar likely to come under renewed pressure
  as more attention is paid to its poor and
  deteriorating fundamentals as opposed to short
  term interest rate differentials, which in any
  case may not increase much further.

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US GDP Growth and the Budget Deficit
Real GDP Growth
US Budget Deficit/Surplus
Source IMF, CBO, Bloomberg
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US Exchange Rate and the Current Account Deficit
Current account position
Nominal Effective Exchange Rate
Source IMF, BEA, Bloomberg
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China Japan Foreign Exchange reserves
Source IMF
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Price Outlook 2

• Competing assets - namely bonds and, especially,
  stocks - are unlikely to do well under the
  probable scenario of lower US and world GDP
  growth.
• Exposure to alternative assets set to increase.
  Should benefit gold directly via outright
  purchases and indirectly through funds buying
  commodity indices that include gold like the GSCI
  and Dow Jones AIG.

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Price Outlook 3

• Inflation concerns mounting due to impact of gt
  60 crude and striking rises in oil product
  prices in the wake of Hurricane Katrina.
• Global political environment remains supportive
  US bogged down in Iraq and crisis over Irans
  nuclear ambitions set to become more serious.

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GFMS Gold Price Forecast for Second Half
Core Gold Price Range in H2 2005 420-480
Average 443
Source GFMS