Carlos Sanchez Associate Director, Research csanchez@cpmgroup

1. CPM Group The Outlook for Gold and Silver New York March 2009 Carlos Sanchez Associate Director, Research csanchez@cpmgroup.com 30 Broad Street | 37th Floor New York, NY 10004 www.cpmgroup.com

2. CPM Group – Commodity Research Special Studies Long Term Outlooks Annual Yearbooks Monthly Advisories Weekly Report

3. CPM Group

4. Summary - Outlook for Gold & Silver • Gold prices are nearing record highs again this year. Silver prices are at historically high levels. With economic conditions around the world rapidly deteriorating investors have rushed to gold and silver as safe havens. • Gold Market Supply and Demand Review, and Outlook • Silver Market Supply and Demand Review, and Outlook • Financial and Economic Conditions Recap • Gold and Silver Price Outlook

5. Long Term Gold Prices & the Recent Price Surge

6. Total Gold Supply

7. Total Gold Fabrication Demand • Total fabrication demand was 77.4 million ounces in 2008, down 6.7% from 82.9 million ounces in 2007. • Demand could fall 7.9% this year, to 71.3 million ounces. A level not seen since 1991.

8. Official Transactions

9. Total Available Supply & Total Fabrication Demand • Total available supply was 120.7 million ounces in 2008, down from 127 million ounces in 2008. • This year total available supply could rise to 123.6 million ounces. • Investment demand has surged from 15.5 million ounces in 2000 to 43.3 million ounces in 2008.

10. Investment Demand • Investment demand has been a main force behind rising and sustained gold prices. • Gold prices on average have risen consistently since 2002. • Investment demand could reach a record 52.3 million ounces this year.

11. Gold Exchange Traded Fund Holdings Have Surged & Gold Coin Sales Have Increased Note: CEF-Central Fund of Canada traded on the Toronto Stock Exchange. GOLD-Gold Bullion Securities traded on the Australian Stock Exchange, GBS-Gold Bullion Securities traded on the London Stock Exchange, GLD-Streettracks Gold Shares traded on the New York Stock Exchange, GLD (JSE)-Gold Bullion Debentures traded on the Johannesburg Securities Exchange, IAU-IShares Comex Gold Trust traded on the American Stock Exchange, ZKB-Zurich Cantonal traded on the Swiss Exchange. ETF-ETF Securities traded on the London Stock Exchange. Data as of 27 February 2009.

12. Trading Volume in the Futures Market

13. Long Term Silver Prices & the Recent Price Surge

14. Total Silver Supply • Total supply is estimated to have been 814.5 million ounces last year. • This year total supply could rise to 827.2 million ounces. • Mine production could rise modestly while secondary supply is expected to remain at high levels.

15. Total Silver Fabrication Demand • Fabrication demand is projected to decline to 722.7 million ounces this year. • Fabrication demand was 740.2 million ounces last year.

16. Silver Market Balance • Fabrication demand has risen overall since the 1980s • Supply has lagged, until recently • From the early 1990s through 2005, silver from investor holdings filled the demand and supply gap • In 2006, Investors became net buyers of silver

17. Silver Market Surplus/Deficit(Also Known as Investment Demand) • It has been net buying or selling by investors that has played a major force behind price increases and decreases over the past years

18. Investor Interest in Silver Has Been Strong Note: CEF-Central Fund of Canada traded on the Toronto Stock Exchange. SLV-iShares Silver Trust traded on the American Stock Exchange. ZKB-Zurich Cantonal traded on the Swiss Exchange. ETF-ETF Securities traded on the London Stock Exchange. Data as of 27 February 2009.

19. Trading Volume in the Futures Market

20. Gold and Silver Market Summary • For gold, total supply has been rising while fabrication demand has been declining. • In silver, total supply has also been rising. Fabrication demand meanwhile is expected to be flat to lower this year. • Strong investment demand has been a key driver for prices, amid increasing concerns over financial and economic conditions. • Investors have been moving toward safe haven assets, which includes gold and silver.

21. Financial and Economic Conditions • GDP is contracting around the world • Stock markets have been volatile, declining, and are vulnerable to further declines • Debt has become a major problem • Property values are declining, and there are rising mortgage problems • Unemployment is rising sharply • Consumer spending is declining, and savings rates are rising, from negative levels in the U.S. • Confidence is at historical lows, and is still trending lower • Credit markets are not working properly, credit has tightened • World governments have tried to cope, but to no avail • Financial markets continue to deteriorate • In this environment, investors have been moving to safe haven assets, including treasury securities, cash, and gold and silver

22. Strong Economic Growth Over the Past Several Years Has Come to a Halt • Over the past decade, there has been strong economic growth, most notable from developing nations. • This year the world is expected to grow at a 0.5% rate.

23. Stock Markets Have Become Increasingly Vulnerable to Sharp Declines • The MCSI all country world index (ACWI) is compromised of 48 country indices, which include 23 developed and 25 emerging market country indices, and is designed to gauge the equity performance. • The MCSI emerging market index tracks the performance of 25 emerging markets. • The MSCI developed world index meanwhile gauges the performance of 23 developed nations.

24. Stock Markets Have Been Volatile, Declining, and are Vulnerable to Further Declines

25. Debt Has Become a Major Problem

26. Property values are declining, and there are rising mortgage problems

27. Unemployment is rising sharply

28. Consumer spending is declining, and savings rates are rising, from negative levels in the U.S.

29. Confidence is trending lower andCredit markets are not working properly

30. World governments have tried to cope, but to no avail

31. Financial markets continue to deteriorate

32. In this environment, investors have been moving to safe haven assets, including treasury securities, cash, and gold and silver

33. Gold and Silver Price Outlook

34. Thank You Carlos Sanchez Associate Director, Research csanchez@cpmgroup.com 30 Broad Street | 37th Floor New York, NY 10004 www.cpmgroup.com