It’s time for gold to shine Amanda van Dyke SF Peterhouse Smaller Companies Gold Fund
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The he SF SF Pete eterho rhouse use Smaller Smaller Comp ompan 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 onten 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
Go Gold ld Basics asics 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 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
Gold old 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 • 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.
Go Gold ld vs vs Qua Quantita ntitativ tive e Easing Easing The he Quant uantit itiv ive Theor heory y of of M Money oney (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
Gold Gold Sup uppl ply y lower lo er grad ades, es, mea mean n mo moving ving mor more e roc ock, k, whic hich h is is mor more e exp xpen ensiv sive e 8,000 1.65 1.55 7,000 1.45 6,000 1.35 5,000 1.25 4,000 1.15 3,000 1.05 2,000 0.95 1,000 0.85 0 0.75 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 Source: Metals Focus Average Ore Throughput (Kt) Average Grade (g/t)
Gold and Geopolitics Since the beginning of China actively wants the the credit crisis, there RMB to be used more has been the potential actively as a reserve that the dollar might currency. Inclusion in lose its role as the the SDR was a first step international reserve The key to that currency, something historically has been a actively lobbied for by “gold guarantee” a China and Russia, the lesson not lost on China largest recent as they are openly accumulators of Gold trying to triple their reserves. national 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, Gold Investment Universe 1200 companies, over 4 major exchanges Asset(s), Size and Scale, Grade, Optionality(growth potential), Jurisdiction, Margin Financeability Quality of Feasibility Studies, Metallurgy, Process and Execution Risks 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
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/
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