GFMS GOLD SURVEY 2014 – UPDATE 2 cover sponsors GFMS GOLD SURVEY 2014 – UPDATE 2 SUMMARY Erica Rannestad Senior Precious Metals Analyst, Americas SME-NY Thursday, January 29, 2015

TANAKA PRECIOUS METALS The GFMS team at Thomson Reuters gratefully acknowledges the generous support from the following companies for this year’s GFMS Gold Survey and its two Updates www.pamp.com www.gold.org TANAKA PRECIOUS METALS www.valcambi.com www.cmegroup.com Italpreziosi SPA www.randrefinery.com www.igr.com.tr www.heraeus-precious-metals.com www.degussa-goldhandel.com

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SNB SURPRISES THE MARKET – UNLEASHING PENT UP SAFE HAVEN DEMAND AND PROVIDING THE GOLD MARKET SOME PRICE DIRECTION

WORLD GOLD SUPPLY AND DEMAND 2013 2014E Change y-o-y H2.14 H1.15* Change y-o-y Total Supply 4,272 4,273 0.0% 2,180 -3.0% 2,053 -1.9% Physical Demand 4,968 4,041 -18.7% 2,001 -7.4% 1,957 -4.1% Physical Surplus/Deficit -695 232 179 97 ETF Inventory Build -880 -152 -110 -75 Exchange Inventory Build -98 1 13 - Net Balance 283 384 302 172 Blah Blah Blah Blah BlahBlah At a global level, we are expecting gold to throw off a surplus in 2014 as well as in 2013, and again in 2015, but the tonnages are relatively low at below 200 tonnes per annum. It may seem counter-intuitive that the physical market was in a surplus last year give the strength of physical demand, but this was a function of the level of ETF selling and a drawdown of inventory on COMEX in particular. These “surpluses” thus encompass a wealth of short-term dynamics, characterised in particular by the headlong rush for the exit from western investors, the associated price slump and the frenzy with which investors in the east snapped up all the metal that the west could throw at it in 2013 – and more, partly explaining the backwardation that developed in mid-year, as well as spikes in local premia as refiners struggled to re-refine London Good Delivery “large” bars into smaller investment products. This year the market is characterised by much slower physical demand, but also a substantial decline in the rate of attrition from the major ETFs. Source: GFMS, Thomson Reuters

GOLD MARKET BALANCE Tonnes USD/oz As everyone in this room will be aware, 2013 saw a dramatic movement of gold out of Exchange Traded Funds as “professional “ investors migrated fro the gold market, but much of that metal, was rapidly taken up by a massive surge in physical demand in South-East Asia. The GFMS team at Thomson Reuters, in our extensive field research in the metals markets estimate that Asian jewellery demand in 2013 soared by 21% in 2013 to reach 1,874 tonnes, or 79% of the world’s total jewellery demand and contributing to a 15% rise in overall physical demand to 4,961 tonnes. Conditions are much calmer this year and indeed the Chinese market in particular has slowed, partly as a result of over-buying last year but partly as the make this reverted to more normal levels, as we shall see in a later slide. The story was similar with respect to retail investment in bars and coins, which jumped by 31% between 2012 and 2013, but we are expecting this to come in substantially lower in 2014 at below 900 tonnes, with the contraction driven particularly by China, where appetites have been far less keen this year. China and India between them accounted for 626 tonnes of bar investment in 2013, o r45% of total, but we are looking for a figure in the region of 340 tonnes, this year, at around 40% of the global total. *Net Balance represents annual change to unknown above-ground stocks. Source: GFMS, Thomson Reuters

TOTAL IDENTIFIABLE INVESTMENT Tonnes Tonnes As everyone in this room will be aware, 2013 saw a dramatic movement of gold out of Exchange Traded Funds as “professional “ investors migrated fro the gold market, but much of that metal, was rapidly taken up by a massive surge in physical demand in South-East Asia. The GFMS team at Thomson Reuters, in our extensive field research in the metals markets estimate that Asian jewellery demand in 2013 soared by 21% in 2013 to reach 1,874 tonnes, or 79% of the world’s total jewellery demand and contributing to a 15% rise in overall physical demand to 4,961 tonnes. Conditions are much calmer this year and indeed the Chinese market in particular has slowed, partly as a result of over-buying last year but partly as the make this reverted to more normal levels, as we shall see in a later slide. The story was similar with respect to retail investment in bars and coins, which jumped by 31% between 2012 and 2013, but we are expecting this to come in substantially lower in 2014 at below 900 tonnes, with the contraction driven particularly by China, where appetites have been far less keen this year. China and India between them accounted for 626 tonnes of bar investment in 2013, o r45% of total, but we are looking for a figure in the region of 340 tonnes, this year, at around 40% of the global total. Source: GFMS, Thomson Reuters

INDIAN DEMAND* NUDGES BACK PAST CHINA Tonnes The shifts in these two markets, which between them account for 54% of jewellery and investment bar and coin demand, suggest that after China’s year of supremacy in 2013, India is likely to regain its position as the world's largest consumer of jewellery and investment bars in 2014, with something over 900 tonnes, while China is expected to be slightly below the 900 tonne level. When industrial fabrication is taken into account, however, we are expecting China to remain the world’s largest gold consumer (945 vs 934 do not publish). It is also arguable that the Indian market is more mature than that of China and that this, along with demographic arguments, point to China becoming the world’s largest jewellery and bar consumer again within a relatively short time horizon, and maintaining that position thereafter. *Demand consists of jewellery and industrial fabrication and retail coin & bar investment

INDIAN IMPORTS REVERT TO 2012 LEVELS Tonnes USD/oz The shifts in these two markets, which between them account for 54% of jewellery and investment bar and coin demand, suggest that after China’s year of supremacy in 2013, India is likely to regain its position as the world's largest consumer of jewellery and investment bars in 2014, with something over 900 tonnes, while China is expected to be slightly below the 900 tonne level. When industrial fabrication is taken into account, however, we are expecting China to remain the world’s largest gold consumer (945 vs 934 do not publish). It is also arguable that the Indian market is more mature than that of China and that this, along with demographic arguments, point to China becoming the world’s largest jewellery and bar consumer again within a relatively short time horizon, and maintaining that position thereafter. Source: GFMS, Thomson Reuters

CENTRAL BANK GOLD PURCHASES & SALES Tonnes As everyone in this room will be aware, 2013 saw a dramatic movement of gold out of Exchange Traded Funds as “professional “ investors migrated fro the gold market, but much of that metal, was rapidly taken up by a massive surge in physical demand in South-East Asia. The GFMS team at Thomson Reuters, in our extensive field research in the metals markets estimate that Asian jewellery demand in 2013 soared by 21% in 2013 to reach 1,874 tonnes, or 79% of the world’s total jewellery demand and contributing to a 15% rise in overall physical demand to 4,961 tonnes. Conditions are much calmer this year and indeed the Chinese market in particular has slowed, partly as a result of over-buying last year but partly as the make this reverted to more normal levels, as we shall see in a later slide. The story was similar with respect to retail investment in bars and coins, which jumped by 31% between 2012 and 2013, but we are expecting this to come in substantially lower in 2014 at below 900 tonnes, with the contraction driven particularly by China, where appetites have been far less keen this year. China and India between them accounted for 626 tonnes of bar investment in 2013, o r45% of total, but we are looking for a figure in the region of 340 tonnes, this year, at around 40% of the global total. Source: GFMS, Thomson Reuters

MINE PRODUCTION Tonnes As everyone in this room will be aware, 2013 saw a dramatic movement of gold out of Exchange Traded Funds as “professional “ investors migrated fro the gold market, but much of that metal, was rapidly taken up by a massive surge in physical demand in South-East Asia. The GFMS team at Thomson Reuters, in our extensive field research in the metals markets estimate that Asian jewellery demand in 2013 soared by 21% in 2013 to reach 1,874 tonnes, or 79% of the world’s total jewellery demand and contributing to a 15% rise in overall physical demand to 4,961 tonnes. Conditions are much calmer this year and indeed the Chinese market in particular has slowed, partly as a result of over-buying last year but partly as the make this reverted to more normal levels, as we shall see in a later slide. The story was similar with respect to retail investment in bars and coins, which jumped by 31% between 2012 and 2013, but we are expecting this to come in substantially lower in 2014 at below 900 tonnes, with the contraction driven particularly by China, where appetites have been far less keen this year. China and India between them accounted for 626 tonnes of bar investment in 2013, o r45% of total, but we are looking for a figure in the region of 340 tonnes, this year, at around 40% of the global total. Source: GFMS, Thomson Reuters

WORLD TOTAL CASH COST CURVES DECLINE 4% IN FIRST 9 MONTHS OF 2014 Tcc 736, -4% - USD, mine closures Prod costs, 974, - 2% - higher dep charges from mine plan revisions All-in $1300 in first 9 mos (exp to be higher due to write-downs at year end On a total cash cost basis, the majority of the industry is in the money at $1,200 gold. Once depreciation and amortisation is added in, however, the curve rises by some $200, which puts perhaps 10% of the sector under water, while the estimate for all-in costs suggests the over half the industry is struggling at $1,200. We do not believe that we are in danger of substantial closures at these price levels, but a drop towards $1,000 could easily put part of the sector in jeopardy. Source: GFMS, Thomson Reuters

WORLD SCRAP SUPPLY Constant 2014 US$/oz Finally among the fundamental forces in the market is the issue of scrap supply. This actually peaked in 2009 at 1,726 tonnes, well before the gold price itself peaked, reflecting the fact that the majority of “near-market” material has new been returned. So far in 2014 the rate of scrap sales has been slow, reflecting reduced jewellery sales This is not only the case in price-sensitive Asia, where material is of high caratage and readily mobilised, but also in Europe and to a lesser extent the United States. In Europe the drivers have included the tightening regulations over scrap return, which have raised costs, while distress selling has also largely abated and here, too, near-market stocks have been depleted. In the US scrap has also fallen sharply, reflecting not only lower prices and better economic positions, but we have also detected a fall in the return of electronic scrap, which is a new trend, reflecting the reduced loadings in electronic components manufactured between three and seven years ago, when gold prices were rising sharply. Meanwhile Middle Eastern scrap return is down, reflecting lower prices and despite continued political turmoil, while low price volatility has reduced Turkish scrap return. In the Far East, some consumers have been awaiting a rebound in the gold price, while scrap flows in China have been broadly flat. The outlier is India, where expectations of falling rupee prices led to an increase in the first quarter, although return has been more sluggish since.

GOLD PRICES EXPECTED TO REACH THE NADIR OF ITS ANNUAL DECLINES IN 2015 2015 Average: $1,170 H1 2015 Average: $1,180

THANK YOU erica.rannestad@thomsonreuters.com Any Questions?