In depth Analysis on precious metals

1. Precious Metals Advisory
Vol. XXV, No. 12 6 December 2012
Precious Metals Prices May Lack Direction in 2013 Next Scheduled Issue: 10 January 2012
Market Data (Data as of 6 December; changes from 8 November)
There is a tremendous amount of uncertainty in the mar-
ket regarding the economy and the future for precious Nymex/Comex Nearby Active Prices %∆ $∆
metals prices. As a result precious metals investors may Gold 1,701.80 ↓ -1.4% -24.20
wait on the sidelines in December. Many price-moving Silver 33.11 ↑ 2.7% 0.87
factors appear already priced into the market, such as de- Platinum 1,600.70 ↑ 3.8% 58.20
mand expectations for the PGMs and silver, a continua- Palladium 697.05 ↑ 13.5% 82.70
tion of the recession in Western Europe, China’s reduced Rhodium* 1,100.00 ↓ -4.3% -50.00
economic growth trajectory, and sovereign debt handling *Rhodium price is BASF daily settlement price.
in Europe. The approaching U.S. fiscal cliff may have Nymex/Comex Inventories oz ∆ oz
contributed to precious metals price increases in Novem- Gold
ber and may continue to influence prices through the end Eligible 8,800,826 ↑ 119,225 8,681,601
of the year. Registered 2,602,693 ↑ 15,114 2,587,579
T otal 11,403,519 ↑ 134,339 11,269,180
Silver
Precious metals prices typically move higher in the first
Eligible 105,456,690 ↓ -1,141,470 106,598,160
few months of the year due to seasonal factors. Overall, Registered 39,836,930 ↑ 3,428,100 36,408,830
however, prices are expected to average modestly lower T otal 145,293,620 ↑ 2,286,630 143,006,990
in 2013 relative to 2012 levels. Investment demand vol- Platinum - T otal 207,850 ↑ 9,350 198,500
umes for gold and silver are expected to come off further Palladium - T otal 531,100 ↓ -2,000 533,100
next year, which will be the primary driver behind lower Open Interest1 oz ∆ oz
gold and silver prices. Investors are expected to continue Gold
to welcome opportunities to buy at price dips. That ten- February 27,853,400 ↑ 21,074,800 6,778,600
T otal 42,851,800 ↓ -2,187,500 45,039,300
dency to view dips in prices as buying opportunities Silver
could dissipate as the year progresses if sell-offs are not March 426,995,000 ↑ 318,450,000 108,545,000
followed by significant rallies, as investors would begin T otal 704,615,000 ↑ 15,535,000 689,080,000
Platinum
to re-evaluate their longer term bullish sentiments in light January 2,724,400 ↓ -79,200 2,803,600
of weaker prices. The platinum group metals may trade April 344,950 ↑ 154,100 190,850
3,091,700 3,005,250
modestly higher on an annual average basis, with weak T otal ↑ 86,450
Palladium
fabrication demand limiting the upside and constrained March 2,362,200 ↑ 2,074,900 287,300
supply keeping prices well supported. T otal 2,377,100 ↑ 200,700 2,176,400
The primary concern at present in the precious metals 1
Data as of 5 December; changes from 7 November.
markets is when to expect demand growth to strengthen.
In 2010 and 2011, assessing demand was fairly easy – Indicators %∆ $∆
these were recovery years so demand was rising rapidly
DJIA 13,074.0 ↑ 2.1% 263
for cars and electronics containing PGMs and silver and FT World Stock Index 383.6 ↑ 3.0% 11.07
for gold jewelry in the booming Chinese and Indian mar- FT Gold Mines Index 2,777.8 ↓ -11.2% -351.79
kets. In 2012, demand expectations for all the precious CRB Index 297.9 ↑ 2.1% 6.07
metals came off. India’s economy slowed and its govern- T -Bills 0.09% ↑ 5.6% 0.01%
ment raised import taxes on gold in order to reduce its ICE Dollar Index 80.24 ↓ -0.7% -0.55
current account deficit, which weighed on gold jewelry $ / Euro 1.30 ↑ 1.8% $0.023
sales. Europe’s auto market contracted, weighing on ex-
pectations for PGM demand growth. China’s economic Report Contents
Prices in 2013…...…......……….....p.1 Palladium..….………......……...p.27
growth slowed, adding further pressure to demand expec-
Price Targets...………....…………p.3 Rhodium.…….….......……….…p.32
tations. The demand picture in 2012 is expected to spill
Macroeconomic Indicators………p.5 Precious Metals Price Table......p.33
into 2013, will no material changes to prospects for
Gold……...……….……...….…….p.8 Equities and Metrics Table..p.34-35
growth.
Silver………………...…………..p.16
Platinum………………………...p.22
Copyright CPM Group 2012. Not for reproduction or retransmission without written consent of CPM Group. Precious Metals Advisory is published monthly by CPM Group and is distributed via e-mail.
The views expressed within are solely those of CPM Group. Such information has not been verified, nor does CPM make any representation as to its accuracy or completeness. Any statements non-factual
in nature constitute only current opinions, which are subject to change. While every effort has been made to ensure that the accuracy of the material contained in the reports is correct, CPM Group cannot
be held liable for errors or omissions. CPM Group is not soliciting any action based on it. Information contained here should not be relied on as specific investment or market timing advice. At times the
principals and associates of CPM Group may have long or short positions in some of the markets mentioned here.

2. Precious Metals Advisory 6 December 2012 Page 2
Precious Metals Prices May Lack Direction in 2013 (cont.)
The lack of demand upside in 2013, especially through
the first three quarters, is expected to weigh on precious
metals prices. If the European and U.S. economies begin
to pick up later in the year, industrial demand for pre-
cious metals could help to improve price appreciation
prospects.
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www.cpmgroup.com

3. Precious Metals Advisory 6 December 2012 Page 3
Price Targets Key Top of Range 1-Month
Nearby active Comex/Nymex prices. Rhodium prices Projection
Forecast Average
are daily BASF prices. All prices are US$/ounce. Average
2nd & 3rd Month
Bottom of Range Projections
GOLD Near Term Outlook — Gold prices could poten-
tially move in a wide range between $1,620 and
1,850
$1,780 during December. If prices settle below
1,780
1,800
1,800 $1,680, prices could decline toward $1,650 or
even $1,620. A decline in prices or consolidation
1,750 at present low levels could induce bargain buying
1,710 1,715
by various market participants including investors,
1,700
1,721 central banks, and fabricators. Prices could show
1,650 some seasonal strength in the first few months of
the year . Fiscal tightening in the United States is
1,600 expected to reduce economic growth during the
1,620
first few months reducing concerns about infla-
1,550
1,550 tion, which could weigh on gold prices. In such an
1,500 environment gold prices could slip toward $1,550.
J-12 J-12 A-12 S-12 O-12 N-12 D-12 J-13 F-13
SILVER Near Term Outlook — Prices are expected to
move sideways to lower this month, as the level of
38
uncertainty regarding the approaching U.S. fiscal
cliff pushes and pulls at prices. Prices could head
36 35.50
35 higher in January and February of 2013 due to
34
32.79
33.45
index and portfolio rebalancing activity as well as
33 the approach of the Comex March futures delivery
32
period at the end of February. Seasonal demand
for silver is typically stronger in the first few
31
30
months of the year. Prices may stay above $30
30 over the next three months. There is a lot of sup-
28
port at $30, but a move toward this level could
trigger a spike lower, possibly toward $26. Indus-
26
trial demand remains weak, which will weigh on
J-12 J-12 A-12 S-12 O-12 N-12 D-12 J-13 F-13 silver, but investors continue to buy on price dips.
Near Term Outlook — Prices may trend higher
PLATINUM over the next three months. Concerns about supply
1,800 remain high, but strike activity in South Africa’s
1,750 platinum mining sector has abated significantly in
1,700 recent months, which may weigh on prices. Anglo
1,700 1,650 Platinum restarted operations at its mines where
1,650 1,635 illegal strikes were taking place. The company has
1,579
1,600 1,595 lost about 200,000 ounces of potential platinum
1,550 output since the illegal strikes began in Septem-
1,560
1,540 ber. Fresh concerns about power supply in the
1,500
country as well as the potential for new strikes are
1,450 expected to keep prices above $1,540 in the near
1,400 term in even the worse price scenario. The first
1,350 few months of the year are typically a seasonally
strong period for platinum prices, which may keep
1,300
J-12 J-12 A-12 S-12 O-12 N-12 D-12 J-13 F-13
platinum above $1,560 (?) and could help push
prices toward $1,700 in January and February.
Continued

4. Precious Metals Advisory 6 December 2012 Page 4
Price Targets Key Top of Range 1-Month
Nearby active Comex/Nymex prices. Rhodium prices Projection
Forecast Average
are daily BASF prices. All prices are US$/ounce. Average
2nd & 3rd Month
Bottom of Range Projections
PALLADIUM Near Term Outlook — Palladium prices could
800 potentially decline as a result of profit taking and
750 the possibility of weaker real demand for the
750 metal in the near to medium term. Prices have
725
risen sharply in recent weeks, which could result
700
in investors booking profits in their positions, es-
650
pecially toward the end of December. There also
638
650 is the possibility that fabrication demand for the
642
600 610
metal will soften during the first half of 2013 due
580
to fiscal tightening in the United States. This
550 could potentially push prices toward $580. Prices
should find support on the downside because of
500 the constant possibility of supply disruptions
from South Africa.
450
J-12 J-12 A-12 S-12 O-12 N-12 D-12 J-13 F-13
RHODIUM
Near Term Outlook — Rhodium prices are ex-
1,400 pected to remain weak over the next three months.
1,350 Rhodium prices are expected to average lower in
1,300 December, at $1,105, from November, when
1,250
prices averaged $1,142, as some of the supply
1,200
constraints supporting prices have eased. Prices
1,200
1,142
1,150
could decline toward $1,000 over the next few
1,150 1,130 months. Some seasonal price strength could help
1,105
1,100 buoy prices in January and February. Demand
1,050 prospects remain bleak, however, which has been
1,050
1,000 weighing heavily on rhodium prices since 2011
1,000
950 and may continue to do so. There is scope for fur-
ther declines in rhodium prices, but investors may
900
J-12 J-12 A-12 S-12 O-12 N-12 D-12 J-13 F-13 M-13 view prices below $1,000 or even $1,100 as a tre-
mendous buying opportunity.

5. Precious Metals Advisory 6 December 2012 Page 5
Macroeconomic Indicators
Real Gross Domestic Product Unemployment Rates in Developed Economies
Quarterly Data, Quarter-over-Quarter Percentage Change Monthly Data, through October 2012
Percent Percent
15 12%
Euro zone United States
11%
United Kingdom Japan
10 10%
9%
5 8%
7%
0 6%
5%
USA China
-5 4%
Japan Brazil
3%
India EU
-10 2%
Jun-96 Nov-98 Apr-01 Sep-03 Feb-06 Jul-08 Dec-10 05 06 07 08 09 10 11 12 13
Note: China and India is Quarterly data, with percentage change on a year-over-year basis. Note: U.K. data is through September 2012.
Industrial Production in Developed Economies Industrial Production in Developing Economies
Monthly through October 2012, Year-over-Year Percentage Change Monthly through August 2012, Year-over-Year Percentage Change
40% 30%
Euro zone
30% United States
United Kingdom 20%
20%
Japan
10% 10%
0%
-10% 0%
-20%
-10%
-30%
Brazil China India
-40% -20%
95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12
Note: Euro Zone data is through September 2012. Note: Chinese. data is through July 2012.
Inflation - Developed Countries Inflation -Developing Countries
Monthly CPI, Year-over-Year Percentage Change, through October 2012 Monthly CPI, Year-over-Year Percentage Change, through October 2012
20%
8%
Euro zone United Kingdom 18%
Japan United States 16%
6% Brazil India
14%
China
12%
4%
10%
2% 8%
6%
0% 4%
2%
-2% 0%
-2%
-4% -4%
05 06 07 08 09 10 11 12 05 06 07 08 09 10 11 12

6. Precious Metals Advisory 6 December 2012 Page 6
Macroeconomic Indicators (cont)
10-Year Treasury minus Three-Month Treasury 10-Year Nominal Treasury Yield minus 10-Year TIPS Yield
Daily Data, through 4 December 2012 Daily Data, through 4 December 2012
Percent Percent
3.0
6.0
5.0 2.5
4.0
2.0
3.0
2.0 1.5
1.0
1.0
0.0
-1.0 0.5
-2.0
J-82 J-85 J-88 J-91 J-94 J-97 J-00 J-03 J-06 J-09 J-12 0.0
Jan-03 Jan-05 Jan-07 Jan-09 Jan-11
Corporate Baa-rate bond minus Ten-year Treasury CBOE Volatility Index: VIX
Daily Data, through 4 December 2012 Daily Data, through 5 December 2012
Percent Percent
7.0 90
80
6.0
70
5.0
60
4.0 50
3.0 40
30
2.0
20
1.0
10
0.0 0
Jan-86 Jan-90 Jan-94 Jan-98 Jan-02 Jan-06 Jan-10 Jan-04 Apr-05 Jul-06 Oct-07 Jan-09 Apr-10 Jul-11 Oct-12
MZM Money Supply and U.S. Inflation Trade-Weighted Dollar and Gold Prices
Monthly Data, through September 2012 Monthly Data, through November 2012
Percent Percent Index $/Oz
40 11 Trade-Weighted Dollar (LHS) Gold Prices
150 2,000
Correlation: negative 0.11
35 10 1,800
MZM Money Supply (LHS) 140
30 8 1,600
U.S. Inflation (CPI) 130
25 7 1,400
120
20 6 1,200
110
15 4 1,000
10 3 100
800
5 1 90
600
0 0 80 400
-5 -1 70 200
-10 -3 60 -
Nov-81 May-86 Nov-90 May-95 Nov-99 May-04 Nov-08 Jan-73 Oct-78 Jul-84 Apr-90 Jan-96 Oct-01 Jul-07

7. Precious Metals Advisory 6 December 2012 Page 7
U.S. Macroeconomic Indicators
Real Personal Income Total U.S. Consumer Debt
Monthly Data, through October 2012 Quarterly End of Period Data, through 1 July 2012
Percent Trillion of Dollars
10.0
16.0
8.0
14.0
6.0
12.0
4.0
10.0
2.0
0.0 8.0
-2.0 6.0
-4.0 4.0
-6.0 2.0
-8.0 0.0
J-60 J-66 J-72 J-78 J-84 J-90 J-96 J-02 J-08 O-49 F-57 J-64 O-71 F-79 J-86 O-93 F-01 J-08
Manufacturers' New Orders: Durable Goods New Orders: Nondefense Capital Goods Excluding Aircrafts
Monthly Data, through October 2012 Monthly Data, through October 2012
Billion of Dollars Billion of Dollars
260 75
240 70
220 65
60
200
55
180
50
160
45
140 40
120 35
100 30
F-92 J-94 O-96 F-99 J-01 O-03 F-06 J-08 O-10 F-92 J-94 O-96 F-99 J-01 O-03 F-06 J-08 O-10
Total Construction Spending Housing Starts
Monthly Data, through October 2012 Monthly Data, through October 2012
Thousands of Units
Billions of Dollars 3000
1400.0
2500
1200.0
1000.0 2000
800.0 1500
600.0
1000
400.0
500
200.0
0.0 0
J-93 J-95 J-97 J-99 J-01 J-03 J-05 J-07 J-09 J-11 J-59 J-64 J-69 J-74 J-79 J-84 J-89 J-94 J-99 J-04 J-09

8. Precious Metals Advisory 6 December 2012 Page 8
Gold Outlook
Gold prices may be expected to move between $1,620 As this is being written gold prices have fallen to levels
and $1,780 in December. There have been a couple of just above support at $1,680. If prices decisively break
sharp declines in gold prices in the past two weeks, re- below this level they could slip toward $1,660. Or, they
flecting investor profit taking and nervousness on the part could cascade sharply lower, to $1,650 or even $1,620. If
of long investors. It may be that investor attitudes toward prices hold above $1,680 the sense that a low has been
the state of the world and the outlook for gold are con- made at least on a temporary basis could lead to increased
tinuing to shift, away from fear of major problems toward demand from fabricators, central banks, and investors, all
a view that economic and political problems remain unre- of whom have become extremely sensitive to the price of
solved but are less likely to trigger a major collapse than gold.
investors had expected earlier
India is presently in the midst of its marriage season and
Gold settled at $1,716.50 on 28 November, down $25.80 any weakness in prices should be supportive of fabrica-
from the previous day and prices had declined to tion demand there. The Indian rupee has also been
$1,695.80 on 4 December, down $25.30 from the prior strengthening lately, reducing the cost of imports, which
trading session. Part of the selling on 28 November was could further boost fabrication demand for the metal from
investors who had bought December Comex calls earlier India.
at lower prices, who had exercised these calls at the close
of trading the day before, on options expiration day.
These investors then sold the futures contracts at the Gold Prices: 1 January 2009 to 5 December 2012
opening of trading the next day. Additional selling is be-
$ / Oz
lieved to have been prompted by stop loss selling by 2,000
nervous longs. The sharpness of these declines is likely to
1,900
have made other remaining investors nervous, and kept
1,800
fresh investors on the sidelines, which could drive prices
lower. That said, some physically backed exchange 1,700
traded products (ETPs) saw an increase in their holdings 1,600
on both of those days, with ETP holdings reaching a re- 1,500
cord high 86.5 million ounces on 4 December. Even 1,400
though holdings are at record levels, the net additions to 1,300
holdings have not been particularly large. The strength in 1,200
incremental demand is more important in pushing prices
1,100
higher.
1,000
Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12
Gold Quarterly Average Price Projections to Q3 2014
$ / Ounce
Quarterly
$1,900 $1,900 Year Quarter Change Annual AVG Change
$1,800 $1,800
AVG
$1,700 $1,700
2012 IV $1,726 4.2% $1,675 6.7%
$1,600 $1,600
$1,500 $1,500 2013 I $1,718 -0.4%
$1,400 Actual $1,400
$1,300 $1,300
II $1,667 -3.0%
Projections
$1,200 $1,200 III $1,608 -3.5%
$1,100 $1,100
$1,000 $1,000
IV $1,641 2.0% $1,659 -1.0%
$900 $900 2014 I $1,673 2.0%
$800 $800
$700 $700 II $1,623 -3.0%
2009 2010 2011 2012 2013 2014
III $1,599 -1.5%

9. Precious Metals Advisory 6 December 2012 Page 9
Demand from central banks also might be expected to In a scenario where the fiscal cliff is averted, market sen-
rise if gold prices soften. During the first 10 months of timent should improve driving gold prices, along with
2012, central banks had added 10.76 million ounces of other markets, higher at the beginning of 2013. Any com-
gold to their reported holdings, on a net basis. Some of promise reached on the fiscal deficit issue, which would
the strongest net additions by central banks were seen in be positive for market sentiment, would still hurt eco-
months when prices softened or were at relatively low nomic growth, only less than if all of the fiscal tightening
levels. Central banks added on a net basis 2.95 million were to occur. As a result of this the present loose mone-
ounces of gold to their holdings in July, when the price of tary policy is expected to remain in place, to offset eco-
gold was at the lower end of its trading range for the year. nomic weakness arising from any fiscal tightening. This
This was the highest monthly net additions made by cen- might provide slight support to gold prices, but probably
tral banks during 2012. Central banks were also seen add- would not drive prices significantly higher from current
ing 2.3 million ounces of metal to holdings when prices levels.
slipped lower in March 2012.
In the less likely scenario, where no deal is reached on
For a variety of reasons investors remain interested in how to address the U.S. fiscal situation gold prices should
owning gold and should be expected to step in as buyers be expected to decline alongside other assets as investors
when prices soften. There is a lot of uncertainty sur- move into cash. In such a scenario monetary accommoda-
rounding the handling of the current U.S. fiscal deficit tion is likely to be increased significantly to support eco-
situation, which if not addressed would trigger automatic nomic growth, which could be supportive of gold prices.
federal spending cuts and tax increases in January 2013
(the fiscal cliff). We expect that the U.S. government will Prices
patch together a relatively superficial agreement at the
11th hour, with most of the proposed tax increases and Volatility in gold prices rose during November, with
budget cuts in the years beyond 2014. However, there are prices both rising and declining sharply on various
likely to be some increases in taxes and reductions in occasions during the month. Monthly average price
government spending, so the question is how much weak- volatility was 20.8%, which was the highest level of
ness should be expected in the first half of 2013, regard- monthly price volatility since July of this year. Price
less of the outcome of the political discussions. More im- volatility should be expected to continue rising dur-
portant for the matters at hand, the gold market, along ing December, as markets focus on the fiscal cliff
with broader financial markets and economic conditions issue in the United States. November began with gold
around the world, will be held hostage to a bathetic politi- prices declining sharply. Prices settled at $1,675.20
cal melodrama over the remainder of December. on 2 November, down from a settlement price of
$1,715.50 the previous day. Prices recovered from
Gold Price Volatility and Gold Fabrication Demand
Gold Price Volatility Annual Total Fabrication Demand
Monthly, Through November 2012 Million Ounces Million Ounces
120 120
90%
110 110
80% 100 Other 100
70% 90 90
80 80
60% Electronics
70 Jewelry, Developed 70
50%
60 60
40% Dental
50 50
30% 40 40
30 30
20%
20 Jewelry, Developing Countries 20
10%
10 10
0% 0 0
75 78 81 84 87 90 93 96 99 02 05 08 11 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11e

10. Precious Metals Advisory 6 December 2012 Page 10
this sharp decline over the next two trading session, increase demand for gold from India. The strength in
reaching an intraday high of $1,720.9 on 6 November the Indian rupee helps to reduce the cost of importing
and settling at $1,715 that day. Prices began to soften gold. These factors could collectively result in some
toward the end of the month, with the sharpest de- strength in gold fabrication demand from India.
cline seen on 28 November, when prices settled at
$1,716.50 (around where they were at the beginning Official Transactions
of the month), down $25.80 from the previous day.
The weakness in prices continued into the first few Central banks added on a net basis, 1.61 million
days of December. ounces of gold to their holdings in October. Gross
additions to holdings during the month were 1.75
million ounces, and gross reductions were 141,000
Fabrication Demand ounces.
India is presently in the middle of its marriage sea- The central bank of Turkey added 564,000 ounces of
son, traditionally a strong gold buying season. The gold to its holdings in October, making it the largest
recent weakness in the price of gold coupled with central bank buyer of gold during the month. The
some strength in the Indian rupee is likely to help Turkish central bank’s holdings reached 10.28 mil-
Official Transactions and Supply
Official Sector Gold Reserve Levels Total World Mine Production
Million Ounces Million Ounces Million Ounces Million Ounces
1,160 1,160 90 90
Indonesia
1,140 1,140 85 85
80 Canada 80
1,120 1,120 75 75
70 Peru 70
1,100 1,100 65 Australia 65
60 60
1,080 1,080 55 United States 55
1,060 1,060 50 50
45 45
1,040 1,040 40 40
35 35
1,020 1,020 30 30
25 South Africa 25
Other Market Economies
1,000 1,000 20 20
980 980 15 15
10 Russia China 10
960 960 5 Transitional Economies 5
0 0
940 940 73 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07 0911e
80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12p
Official Sector Changes In Gold Holdings Official Sector Changes In Gold Holdings in 2009 - October 2012
2012 Through October Excludes China, India and IMF Transactions,
Million Ounces Million Ounces
Million Ounces Million Ounces
30 30
7.0 7.0
25 25
Net Additions/Reductions Gross Additions
20 20 6.0 6.0
Gross Reductions
15 15 5.0 5.0
Gross Additions
10 10 Net Additions/Reductions
4.0 4.0
5 5
0 0 3.0 3.0
-5 -5 2.0 2.0
-10 -10 1.0 1.0
-15 -15
0.0 0.0
-20 -20
Gross Reductions -1.0 -1.0
-25 -25
-30 -30 -2.0 -2.0
04 05 06 07 08 09 10 11 12 Jan-09 Aug-09 Mar-10 Oct-10 May-11 Dec-11 Jul-12

11. Precious Metals Advisory 6 December 2012 Page 11
lion ounces, a record high, in October. The central during the first 10 months with gross reduction of
bank of Brazil added 552,000 ounces of gold to its 290,000 ounces.
holdings in October, taking total holdings of gold to
1.69 million ounces. This was the second consecutive Supply
month that the central bank added gold, after making
no additions to holdings between October 2001 and The global production-weighted cash cost for gold
August 2012. The central bank of Kazakhstan re- mining continued to rise during the third quarter of
sumed purchasing gold after being a seller of the 2012 reaching $733/ounce, up from $730/ounce in
metal in September. The central bank purchased the second quarter of 2012 and $662/ounce in the
242,000 ounces of gold in October, raising its hold- third quarter of 2011. On average the global gold
ings to a record high 3.6 million ounces. mining industry is still enjoying a healthy margin
between cash costs and gold prices. The average
The Bank of International Settlements’ gold holdings price of gold during the third quarter of 2012 was
rose by 371,429 ounces in October. Other central $1,654.37. The price of gold has not been rising in
banks that added gold to their holdings included the the same fashion as it was in the past few years. This
central bank of Russia (13,000 ounces), Mongolia coupled with continuing increases in cash costs is
(1,000 ounces), Greece (1,000 ounces), and Belarus squeezing producer margins. During the third quarter
(2,000 ounces). of 2011 the average price of gold was $1,700 and
The central banks of Germany reduced its holdings cash costs were $662/ounce, giving producers an av-
by 135,000 ounces in October to 109.03 million erage margin of $1,038/ounce in that quarter.
ounces. This was the second time that Germany re-
duced its holdings this year, with the first reduction
made in June. The central bank of Mexico reduced its Investment Demand
holdings for the sixth consecutive month in October,
taking its total holdings of gold to 4.01 million Gold exchange traded product holdings continued to
ounces. This level of gold holdings is still 600,000 rise in November. Total holdings reached 86.3 mil-
ounces higher than levels at the end of 2011. lion ounces at the end of the month, up 932,050
Reported net additions to central bank gold holdings ounces from 85.4 million ounces at the end of Octo-
during the first 10 months of the year were 10.76 mil- ber. Holdings continued to rise during the first few
lion ounces, driven entirely by an increase in gross days of December, reaching a record high 86.5 mil-
purchases made by central banks. Gross additions to lion ounces on 4 December. Even though holdings
central bank gold holdings were 11.06 million ounces are at record levels, the net additions to holdings have
Investment Demand
Month-end Change in ETF Gold Holdings and % Change in Gold Price Exchange Traded Funds' Physical Gold Holdings
Through November 2012 Million Ounces Million Ounces
% Change 100 100
Million Ounces Japan HDFC
40% 8 Religare SBI
90 Quantum Reliance
90
Change in ETF Gold Holdings
Kotak UTI
Gold Price %Change M-t-M 80 AUUSA CSGLDE 80
30% 6
CSGLDC CSGOLD
70 SGLD SGLN 70
20% 4 AGOL GLTR
60 CGL GBEES 60
Sprott German
50 Turkey SGBS 50
10% 2
GOLD NYSE
40 JB ETF 40
0% 0 ZKB IAU
30 GLD GLD 30
GBS GOLD
-10% -2 20 CGT CEF 20
10 10
-20% -4
Jan-07 May-08 Sep-09 Jan-11 May-12 - 0
20032004 2005 2006 2007 2008 2009 2010 2011 2012
Note: Data as of 30 November 2012

12. Precious Metals Advisory 6 December 2012 Page 12
not been very strong. The strength in this incremental end of November, total open interest was 44.3 mil-
demand is more important to price increases. lion ounces and was down to 43.4 million ounces by
Investors in exchange traded funds were seen adding 4 December.
to their holdings when the price of gold was declin- Open interest in the December Comex contract de-
ing or was relatively depressed. This shows that in- clined over the course of November as market par-
vestors remain interested in the metal but are also ticipants either rolled forward or closed out their po-
price sensitive and are reluctant to purchase the metal sitions. Open interest in this contract slipped from
when prices rise. 29.7 million ounces at the beginning of November to
462,300 ounces at the end of the month. Open inter-
Markets and Inventories est in the nearby active February Comex contract was
at 28.6 million ounces on 4 December, down from
Total open interest in the Comex gold futures con- 29.3 million ounces at the end of November.
tract rose to 49.3 million ounces on 23 November, Gold delivered via the December Comex contract
from 45.7 million ounces at the end of October. Total totaled 240,100 ounces as of 5 December. Comex
open interest softened over the remainder of Novem- registered inventories rose by 67,830 ounces on 5
ber and into the first few days of December. At the December from 2.53 million ounces at the end of
November. Total eligible stocks meanwhile declined
Markets and Inventories
Gross Long and Short Positions of Comex Disaggragated Non-Commercial Positions Gross Long and Short Positions of Non-Commercial Positions
Comex Gold Futures and Options. Weekly Data, Through 27 November 2012 Comex Gold Futures & Options.Weekly Data,through 27November 2012
Million Ounces Million Ounces
35 35 Million Ounces Million Ounces
Money Managers Long 35 35
30 Other Traders 30
Net Position 30 30
25 25 Long
25 25
20 20 20 20
Net Fund Position in Comex
15 15 15 15
10 10 10 10
5 5 5 5
0 0
0 0
-5 -5
-5 Short -5 Short
-10 -10
-10 -10 A-95 D-96 J-98 M-00O-01 J-03 J-05 S-06 A-08 D-09 A-11
Jun-06 Apr-07 Mar-08 Jan-09 Nov-09 Oct-10 Aug-11 Jun-12
Comex Gold Inventories & Total Open Interest O Gold Price and Total Open Interest
M
Daily, Through 5 December 2012 Daily, Through 5 December 2012
Million Ounces Million Ounces $/Ounce Million Ounces
13 70 2,000 70
12 Total Open Interest (Right Scale)
1,800 65
11 60
10 1,600 60
9 50 55
1,400 Total Open Interest
8 50
40 1,200
7
45
6 1,000
Eligible Stocks 30 Gold 40
5
800
4 20 35
3 600 30
2 10 400
Registered Stocks 25
1
0 0 200 20
J-06 A-06 A-07 D-07 J-08 M-09O-09M-10 J-11 A-11M-12N-12 2004 2005 2006 2007 2008 2009 2010 2011 2012

13. Precious Metals Advisory 6 December 2012 Page 13
by 54,713 ounces to 8.8 million ounces over the same ber, reducing the increase in net long positions, to
period of time, which resulted in total Comex inven- 3.04 million ounces on 27 November from 2.7 mil-
tories rising to 11.4 million ounces on 4 December, lion ounces on 30 October.
up 13,117 ounces from the end of November.
Net long positions held by large non-commercial Clearing activity by member banks of the London
market participants rose during November reaching Bullion Market Association declined to 19.9 million
21.2 million ounces on 27 November from 19.3 mil- ounces in October on average per day from 22.4 mil-
lion ounces on 30 October. The increase in net long lion ounces in September. The average value traded
positions was driven entirely by an increase in gross per day declined to $34.7 billion in October from
long positions, which reached 24.2 million ounces on $39.2 billion in September. The average number of
27 November from 22.1 million ounces at the end of transfers slipped to 2,453 in October from 2,911 in
October. Gross short positions rose during Novem- September.
Bullion Coins
Monthly U.S. Eagle and Buffalo Gold Coin Sale s by the U.S. Mint
Monthly U.S. Mint Gold Coin Sales to Dealers
Month 2010 2011 2012
Thousand Ounces Thousand Ounces
350 350 January 85,000 133,500 140,500
Fe bruary 84,000 92,500 28,000
300 300 March 102,000 111,500 88,500
April 117,000 128,500 29,000
250 250 May 260,500 122,500 62,500
June 185,000 67,000 70,000
200 200 July 175,000 76,500 34,500
August 57,000 140,000 48,000
150 150 Se pte mbe r 98,000 104,000 77,000
O ctobe r 94,000 62,500 70,000
100 100 Nove mbe r 112,000 49,500 153,000
De ce mbe r 60,000 86,500
50 50
YTD Total June 2012 1,369,500 1,088,000 801,000
% Change YOY -0.6% -20.6% -26.4%
0 0
92 94 96 98 00 02 04 06 08 10 12 Annual Total 1,429,500 1,174,500 801,000
% Change Previous Year -12.0% -17.8%
World Gold Supply and Demand Gold Quarterly Average Price Projections
Million Ounces $/Ounce, through Q3 2014
140 140 $2,000 $2,000
130 Investment Demand 130
120 120 $1,800 $1,800
110 110
$1,600 $1,600
100 100
Available Supply
90 90 $1,400 Projections $1,400
80 80 Actual
$1,200 $1,200
70 70
60 60 $1,000 $1,000
50 50
$800 $800
40 40
30 30 $600 $600
Fabrication Demand
20 20
$400 $400
10 10
0 0 $200 $200
50 53 56 59 62 65 68 71 74 77 80 83 86 89 92 95 98 01 04 07 10 13p 2002 2004 2006 2008 2010 2012 2014

14. Precious Metals Advisory 6 December 2012 Page 14
Bullion Coins Sales during the first 11 months of 2012 declined to
124,000 ounces, down 19.2% from the same period
U.S. Mint gold coin sales reached 153,000 ounces in in 2011.
November, the highest level reached since July 2010 Premiums on both the American Eagle and American
when sales had totaled 175,000 ounces. Sales during Buffalo gold coins remained mostly flat during No-
the first 11 months of 2012 totaled 801,000 ounces, vember. This suggests that the market was well sup-
down 26.4% over the same period in 2011. On a year plied and could potentially result in softening in de-
-on-year basis, sales during November 2012 were up mand from dealers in December.
209%, however.
U.S. Mint American Eagle gold coin sales reached
136,500 ounces during November 2012, the highest
level of sales for these coins since July 2010. Sales of
these coins during the first eleven months of the year
reached 677,000 ounces, down 27.6% from the corre-
sponding period in 2011.
American Buffalo gold coin sales continued to rise in
November reaching 16,500 ounces during the month.
This was up from 8,500 ounces from the same period
in 2011 and up from 11,000 ounces in October 2012.

15. Precious Metals Advisory 6 December 2012 Page 15
Gold Statistical Position
Million Ounces
Supply 2007 2008 2009 2010 2011 2012p 2013p
Mine Production
China 8.7 9.1 10.1 11.0 11.6 12.3 13.0
Australia 7.9 6.9 7.2 8.4 8.3 8.1 8.4
United States 7.7 7.5 7.2 7.4 7.6 7.2 7.4
South Africa 8.2 7.1 6.6 6.2 6.0 5.3 5.1
Peru 5.5 5.8 5.9 5.3 5.3 5.4 5.5
Indonesia 3.7 2.1 4.0 3.4 2.5 1.8 2.0
Canada 3.3 3.1 3.1 2.9 3.2 3.2 3.1
Other Market Economies 20.4 21.5 23.1 24.6 25.0 26.0 28.0
Total 65.3 62.9 67.1 69.2 69.4 69.3 72.6
% Change Year Ago -0.7% -3.6% 6.6% 3.1% 0.3% -0.2% 4.8%
Secondary Supply 33.8 39.8 41.2 40.3 40.6 40.7 38.3
% Change Year Ago 22.5% 17.8% 3.7% -2.1% 0.5% 0.3% -6.0%
Transitional Economy
Sales 11.3 12.0 10.5 9.7 9.0 7.5 7.0
% Change Year Ago 9.7% 6.2% - -7.6% - - -
Total Supply 110.3 114.7 118.8 119.2 119.0 117.6 118.1
% Change Year Ago 6.5% 4.0% 3.6% 0.3% -0.2% -1.2% 0.4%
Fabrication Demand
Industrial Demand
Electronics 9.1 9.1 7.9 8.5 8.5 8.4 8.6
Dental/Medical 2.5 2.4 2.2 2.2 2.1 2.1 2.1
Other 3.9 4.6 4.1 4.1 4.7 4.8 4.9
Total 15.4 16.1 14.2 14.8 15.3 15.3 15.6
% Change Year Ago 15.6% 4.2% -11.9% 4.6% 3.1% 0.0% 1.8%
Jewelry
Developed Countries 14.9 12.4 9.4 8.7 8.4 8.2 8.1
Developing Countries 60.0 58.4 48.0 49.6 49.1 51.0 53.8
Total 74.9 70.8 57.3 58.3 57.5 59.2 61.8
% Change Year Ago -0.8% -5.5% -19.0% 1.7% -1.4% 3.0% 4.5%
Total Fabrication Demand 90.4 86.9 71.4 73.1 72.7 74.5 77.4
% Change Year Ago 1.7% -3.9% -17.8% 2.4% -0.5% 2.4% 3.9%
Stock Demand
Total Official Transactions -16.0 0.2 16.8 10.1 12.7 11.0 9.0
% Change Year Ago 37.2% NM NM -39.9% 25.9% -13.6% -18.2%
Net Private Investment
Official Coins 4.4 5.0 6.0 6.3 4.5 4.1 3.6
Bullion 28.8 18.1 20.1 24.7 26.0 25.4 25.6
Medallions 2.8 4.5 4.5 5.0 3.0 2.7 2.4
Total 36.0 27.6 30.6 36.0 33.5 32.1 31.7
% Change Year Ago 36.5% -23.3% 10.7% 17.8% -6.9% -4.1% -1.4%
Total Stock Demand 20.0 27.8 47.4 46.1 46.3 43.1 40.7
% Change Year Ago 36.0% 39.3% 70.4% -2.7% 0.3% -6.7% -5.6%
Total Demand
(Fabrication Plus Stock Change) 110.3 114.7 118.8 119.2 119.0 117.6 118.1
Price Per Ounce YTD
High $842.70 $1,004.30 $1,218.30 $1,421.40 $1,889.70 $1,796.50
Low 606.90 705.00 807.30 1,052.80 1,318.40 1536.60
Average 700.11 872.82 974.70 1,228.63 1,572.00 1669.27
% Change Year Ago 15.4% 24.7% 11.7% 26.1% 27.9% 6.5%
*Million Ounces; Source: CPM Group; Notes: There may be discrepancies in totals and percent changes due to rounding; Net official sales are indicated by negative numbers; The price
is the Comex nearby active settlement, 2012 Through 11 October. Longer term projections are available in CPM Group's Gold Supply, Demand, and Price: 10-Year Projections report; e
-- estimates; p -- projections; NM -- Not meaningful; December 5, 2012

16. Precious Metals Advisory 6 December 2012 Page 16
Silver Outlook
Silver prices rose last month, after trending lower in Oc- volumes in the Comex silver futures market are down
tober. The roll of the December contract into the March about 30%, clearing volumes in the London interbank
and forward month contracts helped boost prices. This market are 20% lower this year than last year, silver Ea-
coupled with seasonal demand for the metal ahead of Di- gle bullion sales are down 15% year-to-date, and silver
wali, contributed to the 11.3% trough-to-peak increase in ETP net purchases are the lowest seen since 2005
settlement prices between 2 and 29 November. (excluding 2011 when investors sold a net of 24.4 million
ounces of silver ETPs). CPM Group is projecting invest-
Silver prices have been trending lower since April of last ment demand for silver to fall to 124.3 million ounces in
year. Each price rally has ended at lower highs. Intraday 2012 from 133.2 million ounces last year. A further de-
peaks went from $49.82 in April 2011 to $44.09 in Au- cline in investment demand to 102.0 million ounces in
gust 2011 to $37.48 in February 2012 to $35.45 in Octo- projected for 2013 while prices may come off by 8%
ber 2012 to the most recent peak of $34.35 on 29 Novem- from 2012 levels.
ber. Price support throughout this period has been firmly
positioned at $26.25. Going forward CPM Group expects Silver prices are projected to move sideways to lower this
further declines in silver prices, driven by continued month amid reduced trading activity during the holiday
weakness in industrial demand and rising supply. These season in the Western hemisphere. Investor concerns
future declines, however, may be limited. Over the past about the fiscal cliff so far have appeared immaterial to
year, despite a broad decline in the price of the metal, the silver market. It seems investor views about the ap-
investors have remained relatively interested in silver as a
form of investment. Investors have purchased a net of Silver Prices: 1 January 2010 to 5 December 2012
40.6 million ounces of silver exchange traded products
$ / Oz
(ETPs), more than reversing the 24.4 million ounces of
52
silver ETPs sold during 2011. Last month, the U.S. Mint
48
witnessed a spike in November bullion coin sales, selling 44
3.2 million ounces of silver Eagle bullion coins, up 40
128.3% from last November, to authorized dealers. Also, 36
net long positions held by non-commercial Comex mar- 32
ket participants in silver futures and options have been 28
increasing since July and open interest in Comex silver 24
futures rose above levels seen in April of last year when 20
prices peaked last month. 16
12
Even though investment demand has been positive this 8
Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12
year thus far, 2012 pales in comparison to 2011. Trading
Silver Quarterly Average Price Projections to Q3 2014
$ / Ounce
Quarterly
$48 $48 Year Quarter Change Annual AVG Change
AVG
$44 $44
$40 $40
2012 IV $32.72 9.7% $31.32 -6.0%
$36 $36 2013 I $29.47 0.9%
Actual
$32 $32
II $30.08 -8.0%
$28 $28
III $32.99 -4.0%
$24 $24
$20 $20 IV $33.28 3.0% $30.89 -1.3%
$16 $16 2014 I $30.62 4.0%
Projections
$12 $12
II $29.40 -1.0%
$8 $8
2009 2010 2011 2012 2013 III $30.28 -6.0%