W hat is next for gold?
􀂄 Where could prices go?
We believe that the current environment is one which can best be characterised as
having a ‘low margin of error’ for central bankers; with the prospects for
deflation/inflation as becoming more extreme. The high potential for policy error is
generating considerable interest in certain assets which are perceived as ‘stores of
value’ including gold.
􀂄 Our econometric model indicates upside risk
Using a proprietary econometric model we have generated a probability cone for
the future possible price path for gold. Using different environments for the level
of inflation volatility, US dollar and absolute level of inflation we have determined
that future returns on gold are likely to be positively asymmetric, with potential
upside to US$2,500/oz.
􀂄 Exposure to gold recommended
Our asset allocation team has moved gold to overweight from neutral. Given the
broad uncertainties in the current macro climate we believe that investors should
look to gold given its historic tendency to act as a hedge against these risks.
􀂄 Equity performance
Our assessment of equity performance from 1900 suggests that gold equities are
strong performers versus the market during periods of financial risk. During the
1929 crash, for example, Homestake Mining strongly outperformed the S&P.
Preferred gold mining equities include Goldcorp, Anglogold and Lihir.

Contents page
Summary 3
How does gold work? 6
— Central banks.......................................................................................................9
Quantifying upside 11
— Gold drivers – Analysis.......................................................................................13
— Scenarios...........................................................................................................15
— What if there was a new gold standard?.............................................................20
Equity impact 22
— Gold equities: performance characteristics.........................................................25
— Gold equities and market perceptions ................................................................27
— Valuation summary ............................................................................................30
Companies 31
Agnico-Eagle Mines Ltd. 32
— Agnico-Eagle......................................................................................................33
AngloGold Ashanti 34
— AngloGold Ashanti .............................................................................................35
Barrick Gold Corporation 36
— Barrick Gold .......................................................................................................37
Centerra Gold Inc. 38
— Centerra Gold ....................................................................................................39
DRDGOLD Ltd 40
— DRDGOLD.........................................................................................................41
Goldcorp Inc. 42
— Goldcorp ............................................................................................................43
Gold Fields Ltd 44
— Gold Fields.........................................................................................................45
Harmony Gold Mining Co Ltd 46
— Harmony Gold....................................................................................................47
Hochschild Mining 48
— Hochschild Mining..............................................................................................49
Kinross Gold Corporation 50
— Kinross...............................................................................................................51
Lihir Gold Limited 52
— Lihir Gold ...........................................................................................................53
Newcrest Mining Limited 54
— Newcrest............................................................................................................55
Newmont Mining Corp. 56
— Newmont............................................................................................................57
Technical appendix 58