Its time for gold to shine Amanda van Dyke SF Peterhouse Smaller - - PowerPoint PPT Presentation

It’s time for gold to shine

Amanda van Dyke

SF Peterhouse Smaller Companies Gold Fund

Dis isclai laimer mer

Peterhouse Asset Management Limited does not accept liability for any loss arising from the use of this report. This research does not constitute advice or a personal recommendation or take into account the particular investment objectives, financial situations or needs of individual clients. Investors are advised to contact their investment advisor as to the suitability of any investments, for their own circumstances, before taking any action. Investors are in particular recommended to check that the information provided is in line with his/her own circumstances with regard to any legal, regulatory, tax or other consequences, if necessary with the help of a professional

• advisor. The

value of securities and the income from them may fluctuate. No responsibility is taken for any losses, including, without limitation, any consequential loss from any independent actions taken without proper advice from an independent investment advisor. NEITHER THIS DOCUMENT NOR ANY COPY THEREOF MAY BE SENT, TAKEN INTO OR DISTRIBUTED IN THE UNITED STATES OR TO ANY US PERSON. Peterhouse Asset Management Limited is authorised and regulated by the Financial Conduct Authority.

The he SF SF Pete eterho rhouse use Smaller Smaller Comp

• mpan

anies ies Go Gold ld Fu Fund nd

The SF Peterhouse Smaller Companies Gold Fund, invests in a focused portfolio of what we believe are some of the leading high quality gold companies. We select ‘best in class’ companies with superior long-term growth prospects. Our rigorous bottom-up approach stock selection identifies typically 60-70 global companies. We have ambitious plans for the fund as part of a wider and significant growth strategy for PAML. We believe that the outlook for gold and for smaller company gold shares in particular is positive and we are aiming to position the fund to ensure it can continue to take advantage of a secular re rating in the gold market

Con

• nten

tent

Gold Basics Macro Factors supporting a new gold bull market Gold vs Currencies Gold vs Real Yields Gold and the Effects of Quantitative Easing Gold vs Equities Gold Investment Demand

Gold Central Bank Demand

Gold Demand in Asia Gold Supply Gold and Geopolitics Gold and the International Monetary Systems Why Gold Stocks not Gold? Small caps and the gold bull market Where is Gold in this Cycle? Where are Gold stocks in this cycle? How to Invest in Gold Mining companies Our Investment Thesis

“Money is Gold and nothing else”

JP Morgan testifying to congress in 1912

Gold Gold Basi asics cs

Demand Breakdown:

• 52% jewellery
• 18% official holdings (central

banks and nations)

• 16% investments
• 12% industrial use
• 2% unaccounted for

It is estimated that 166000 tonnes of gold has ever been mined and is still in vaults and around necks all over the world USGS estimates there is 52000 tonnes of mineable gold left in the ground (1.7boz) At present there is about ¾ of an ounce per person in the world

Go Gold ld Basics asics

Go Gold ld vs vs C Cur urren encies cies

Gold that performs well when other currencies are declining. The gold bull market began over a year ago in many currencies.

Go Gold ld vs vs C Cur urren encies cies

A high dollar dampens US GDP (exports less imports more ) A high dollar also dampens inflation (US imports deflation suppressing fed efforts) The majority of US politicians are actively calling for a lower dollar

• The world needs inflation and negative yields in the wake of quantitative easing.
• There are now more than $8 trillion worth of government bonds with negative interest
• rates. Keeping inflation higher than the base rates can eventually inflate away a large

portion of the debt

• Negative real rates will not end until the debt to GDP level of western countries return

to a statistically normal range

• Negative interest rates are essentially an expropriation of savers’ money, and gold is a

viable alternative.

Gold

• ld vs Real

eal Yiel Yields ds

Precious s me metals s enter bull ma markets when real yi yields s decline and st stay y negative

Go Gold ld vs vs Qua Quantita ntitativ tive e Easing Easing

The he Quant uantit itiv ive Theor heory y of

• f M

Money

• ney (T

(The Ir he Irving ving Fisher E Fisher Equa quation) ion)

MV=PT

M=Money supply V=Velocity (how many times money changes hands) P=price (real price of goods, ie gold ) T=volume of transactions of goods and services

Gold v ld vs s Qua Quantativ ive Easi Easing

Eveonline.com

Gold vs Equities

• Over long periods of time gold and equity markets have an inverse

relationship

• Bear markets in equities start with over valuation and debt, which

leads to bull markets in gold

• Equity markets are turning… because in historical terms they have

high valuations and higher levels of debt.

• The world is flat, we are looking towards years of unprecedented

slow growth coupled with inflation this means negative or flat earnings and equity valuations

Go Gold ld vs vs Equiti Equities es

Go Gold ld In Investmen estment t Deman Demand d

Go Gold ld Cen entr tral al Ban ank k Dema emand nd

Go Gold ld Dema emand nd in in Asi sia a

Of the 7.3bn and growing world population 60% live in Asia, and Asians culturally believe enthusiastically in gold. China has actively encouraged its citizens to buy gold and the Shanghai gold exchange is now the largest in the world 1400/3000 tonnes of gold produced last year went to China alone 600 tonnes went to India As Asian currencies devalue, and inflation becomes rampant, their citizens scramble to buy more gold

Gold Gold Supp Supply y

gett tting mo more rare and mo more expensiv sive

• In 2012, it was forecast that we

would reach peak gold production in 2020, based on the dearth of high grade and scale discoveries in the last 10 years despite record exploration spend and advanced exploration technology.

• In 2015 we reached peak gold

production of 3ktonnes

• USGS estimates that of the 166k

tonnes ever mined and in existence, 52k tonnes remain according to the US Geological Study Source: USGS

0.75 0.85 0.95 1.05 1.15 1.25 1.35 1.45 1.55 1.65 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 Average Ore Throughput (Kt) Average Grade (g/t)

Gold Gold Sup uppl ply y

lo lower er grad ades, es, mea mean n mo moving ving mor more e roc

• ck,

k, whic hich h is is mor more e exp xpen ensiv sive e

Source: Metals Focus

Gold and Geopolitics

China actively wants the RMB to be used more actively as a reserve

• currency. Inclusion in

the SDR was a first step The key to that historically has been a “gold guarantee” a lesson not lost on China as they are openly trying to triple their national reserves. Since the beginning of the credit crisis, there has been the potential that the dollar might lose its role as the international reserve currency, something actively lobbied for by China and Russia, the largest recent accumulators of Gold reserves.

Why Gold stocks not Gold?

So So why hy ar are e junior junior mini mining ng eq equiti uities es the the plac place e to be to be whe hen Go n Gold ld rebo boun unds ds

Source: Canaccord Genuity, TSX Data Group

Where Is Gold in this Bull Cycle

Where are Gold Stocks in this Bull Cycle

Investment Methodology,

Asset(s), Size and Scale, Grade, Optionality(growth potential), Jurisdiction, Margin Financeability Management Track Record, including BoD, Comp and Incentives Market performance, Peer Analysis, Valuation and IRR Catalysts, Newsflow, Timing, Entry and Exit points 50 co’s Gold Investment Universe 1200 companies, over 4 major exchanges Quality of Feasibility Studies, Metallurgy, Process and Execution Risks

SF Peterhouse Smaller Companies Gold Fund The SF Peterhouse Smaller Companies Gold Fund, invests in a focused portfolio of what we believe are some of the leading high quality gold companies. We select ‘best in class’ companies with superior long-term growth prospects. Our rigorous bottom-up approach stock selection identifies typically 60-70 global companies. We have ambitious plans for the fund as part of a wider and significant growth strategy for PAML. We believe that the outlook for gold and for smaller company gold shares in particular is positive and we are aiming to position the fund to ensure it can continue to take advantage of a secular re rating in the gold market Platforms and brokers should be able to make the fund available on demand from a customer. The fund is listed by a number of platforms / stockbrokers such as CoFunds, Hargreaves Landsdowne and Novia, which will be able to facilitate investment via an ISA or a dealing account. The ACD of the fund, Sharefunds Ltd has a sister company, The Share Centre Ltd which offers both ISAs and dealing accounts and makes the fund available to its customers. Accounts there can be set up at www.share.com. Fund Factsheets can be found at www. peterhouseam.com/documents/