Summary

This presentation was supported by an extensive slide deck; please contact us if you would like a copy. Philip started by explaining that the Metals Focus’ team are based in 8 jurisdictions around the world who are always gathering information to put together supply / demand figures and produce short and long dated forecasts for gold and other precious metals.When looking at Covid’s impact on the gold supply there was an ~4.4% decline; however, by the back end of 2020 we were back at pre-Covid levels. With several new mines starting up this year, supply should increase from 4,674 tons last year to 5,000 tons in 2021. In 2020, higher by-product credits were the result of rising precious metals prices and lower energy prices, and with this dynamic expected to continue, precious metals prices will remain strong. Also, noteworthy, is that gold miners’ costs are well below current prices at ~$900 per ounce. On the demand side, there was a serious hit in jewellery fabrication purchasing in 2020 and we are only seeing a partial recovery with high and volatile gold prices and consumers in many economies have taken a significant hit to their disposable incomes due to the pandemic. In India, it is marriage season and many restrictions have been lifted, in addition, there has been a cut in the bullion import duty tax so there is cause for optimism. Other countries Philip discussed included New Zealand, Singapore, Hong Kong, Russia, Turkey and UAE. Global demand fell from 4,000 tons in 2019 to a historically depressed level of 3,000 in 2020. Metals Focus is expecting 3,500 this year resulting in a massive surplus which investors will be hoovering up forcing prices higher.In terms of the gold price, there were two failed attempts in late 2020 and early 2021 for gold to break $2,000, but the resulting corrections have seen the gold price protected in the high $1,700s. They have seen good buy in and bargain hunting coming into the market and positive sentiment among investors which means that conditions exist for the gold price to move higher. Given the dislocation between US equities and the real economy once this starts to change and with declining stock prices, they expect to see a rotation into gold as a safe haven. Institutions will be increasingly purchasing gold as a hedge against inflation and inflationary expectations are clearly creeping higher. Gold prices should strengthen throughout 2021 and 2022.In terms of the Q&A, Philip discussed how the silver price should see the largest increase out of any of the precious metals this year - expecting at least a 40% rise. He is positive on platinum and palladium, whilst he does not see bitcoin replacing gold as a safe haven and is highly sceptical on cryptocurrencies overall. Retail investors buying physical gold was also covered, as were longer-term gold supply forecasts. Exciting times in Russia as it rises up the ranks in terms of gold production and where there is now a lot of activity in the sector. Finally, the inverse relationship between treasury yields and the gold price.

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