GOLD AND SILVER PRICE DRIVERS CURRENT DEMAND TRENDS AND OUTLOOK. CAMERON ALEXANDER MANAGER, PRECIOUS METALS DEMAND, ASIA RESEARCH & FORECASTS, GFMS, THOMSON REUTERS INDIA INTERNATIONAL GOLD CONVENTION PUNE, 13th SEPTEMBER 2014

TWO METALS, BOTH WITH DUAL CHARACTERISTICS Gold is both a commodity and a currency; while Silver is both industrial and precious

WORLD GOLD SUPPLY AND DEMAND (tonnes) (f)2015(f) Total Supply 4,1044,3464,5094,4554,2554,2144,022 Physical Demand 3,0233,8094,5124,3164,9564,5014,197 Physical Surplus/Deficit 1, ETF Inventory Build Exchange Inventory Build Net Balance Source: GFMS, Thomson Reuters

GOLD: PHYSICAL MARKET BALANCE; TONNES

GOLD AGAINST THE $:€ RATE, JANUARY 2013 TO AUGUST 2014 Source: Thomson Reuters Eikon

WORLD GOLD SUPPLY Source: GFMS, Thomson Reuters Net total tonnage

WORLD MINE SUPPLY Source: GFMS, Thomson Reuters

PREVIOUS DECADE Higher gold prices resulted in lower cut-off and processed grades. Increasing production on capacity expansions. Surging mining cost inflation in tandem with rising gold prices. Rampant M&A activity at excessive valuations. High gold prices promote development of new projects, high capital investment expenditure. NOW Lower gold prices leading to higher cut-off and processed grades. Increased production on higher processed grades. Lower gold prices force producers to control mining costs – efficiency. Falloff in M&A, large impairments and asset divestments. Lower gold prices force a rethink to capital investment allocation and prioritisation. THE CURRENT STATE OF THE GOLD MINING INDUSTRY 8

WORLD TOTAL CASH AND ALL IN COST CURVES 2013 VERSUS Average Gold Price ($1,668.98/oz) Source: GFMS, Thomson Reuters

ANNUAL MINE HEDGING ACTIVITY Source: GFMS, Thomson Reuters

EVOLUTION OF THE GLOBAL HEDGE BOOK Source: GFMS, Thomson Reuters

WORLD GOLD DEMAND Source: GFMS, Thomson Reuters

NET OFFICIAL SECTOR GOLD PURCHASES/SALES Source: GFMS, Thomson Reuters Tonnes Net Sales Net Purchases * signatories to the Central Bank Gold Agreements **all other countries

JEWELLERY FABRICATION AND IDENTIFIABLE INVESTMENT

OVERALL IDENTIFIABLE QUARTERLY INVESTMENT LEVELS Source: GFMS, Thomson Reuters

GOLD ETFS AND OTHER SIMILAR PRODUCTS Source: GFMS, Thomson Reuters Tonnes

INVESTORS’* POSITIONS IN COMEX GOLD FUTURES * non-commercial futures positions taken as proxy for investors’ positions, Source: CFTC Tonnes

INDIAN MEASURED BAR AND COIN DEMAND Source: GFMS, Thomson Reuters

GOLD IN US$ AND RUPEE TERMS Source: Thomson Reuters Eikon

CHINA CONSUMPTION Lunar New Year : First quarter Wedding season: Lunar month of September, this year it is from 24 th Sep to 21 st Nov

GOLD AGAINST OTHER ASSET CLASSES EU/US$ Rate US/Yen Rate Silver Oil (WTI) GSCI CRB Index S&P Source: GFMS, Thomson Reuters

GOLD AGAINST OTHER ASSET CLASSES Q Q Q Q Q Q EU/US$ Rate US/Yen Rate Silver Oil (WTI) GSCI CRB Index S&P Source: GFMS, Thomson Reuters

GOLD AND THE S&P 500 Source: Thomson Reuters Eikon

GOLD PRICE & TRADE-WEIGHTED DOLLAR Gold, London p.m. Fix, US$/oz Trade Weighted Dollar (Inverted, 2 nd Jan 2013=100) Indian import duty raised from 4% to 6% Source: GFMS, Thomson Reuters EC suggests Cyprus sells 400M euro worth of gold Specification issued that Indian import:export ratio for gold must be at least 80:20 Fed announces it could start “tapering” asset purchases in 2013 Tensions ease as Syrian chemical weapons deal reached Fed announces tapering of $10bn to $75bn from January President Yanukovych leaves Ukraine

SILVER

WORLD SILVER SUPPLY AND DEMAND (tonnes) (f)2015(f) Total Supply 28,35733,30332,27331,26830,64032,27931,897 Physical Demand 26,73332,11733,24729,68533,62631,81031,912 Physical Surplus/Deficit 1,6241, ,586-2, ETF Inventory Build 4,7844, , Exchange Inventory Build , Net Balance -2,684-2, ,062-3, Source: GFMS, Thomson Reuters

IDENTIFIABLE BULLION STOCKS INVENTORY ESTIMATES Source: GFMS, Thomson Reuters Tonnes

WORLD SILVER SUPPLY

2013 WORLD SILVER SUPPLY BY SOURCE (mine and scrap

WORLD SILVER FABRICATION DEMAND

SILVER DEMAND BY END-USE (tonnes)

SILVER DEMAND BY END-USE (%)

SILVER ETF HOLDINGS *Includes ETFS London, Australia, NYSE, GLTR and WITE ; ** Includes Sprott Physical Silver Trust, Julius Baer, DB Physical Silver, Blackrock Silver Bullion ETF, Mitsubishi UFJ Tokyo, Silver Bullion Trust, iShares Physical Silver ETC, Source Physical Silver, Royal Canadian Mint ETR; Source: Respective issuers Tonnes

SILVER AND OTHER ASSET CLASSES Q Q Q Q Q1.2014Q XAU EUR/USD S&P VIX Copper

SILVER VS GOLD OVER ONE YEAR Source: Thomson Reuters Eikon

SILVER VS GOLD OVER 20 YEARS Source: Thomson Reuters Eikon

SILVER VS COPPER OVER ONE YEAR Source: Thomson Reuters Eikon

SILVER VS S&P 500 OVER ONE YEAR Source: Thomson Reuters Eikon

GOLD: SILVER RATIO OVER 20 YEARS Source: Thomson Reuters Eikon

GOLD: SILVER RATIO OVER ONE YEAR Source: Thomson Reuters Eikon

SILVER PRICES

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