PRESS RELEASE

04 October, 2010

INVESTORS PLACE SIGNIFICANT VALUE AT RISK BY NOT CONSISTENTLY

HOLDING GOLD

London/New York/Beijing: Investors who do not hold gold or view it purely as a temporary safe haven
asset are failing to harness its full potential to protect wealth, according to a new study published by
the World Gold Council (WGC) today. In its latest report, Gold: Hedging Against Tail Risk, the WGC
shows that a modest, consistent holding of gold mitigates the potential for significant loss of value
during extreme market events.

In the analysis the WGC shows that during the period between October 2007 and March 2009—the
height of the global financial meltdown—an investor with a portfolio of US$10 million experienced an
additional US$500,000 financial loss simply by not maintaining a position in gold. The study used a
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composition similar to a benchmark portfolio, which included an 8.5% allocation to gold, to show that
total losses incurred during the period reduced by 5% relative to an equivalent portfolio without gold.

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In 18 of the 24 tail risk scenarios analysed by the WGC, portfolios which included gold outperformed
those which did not. The term tail risk refers to extreme events that may be considered unlikely, such
as the “Black Monday” market crash of October 1987, but which tend to have a considerably negative
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effect on an investor’s capital when they do occur.

Juan Carlos Artigas, Investment Research Manager at the World Gold Council and author of
the research, commented:
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“In previous studies, the WGC has shown gold to be a highly effective and consistent portfolio
diversifier. We can now demonstrate that gold does not only help increase expected risk-adjusted
returns, it can also considerably mitigate the potential for wealth to be eroded by extreme events.

“In the last decade we have seen two of the worst bear markets in the last hundred years. As one
might expect, sensitivity to risk still runs high for investors around the world, and as assets are rebuilt

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A benchmark portfolio is considered to be one with a 50%-60% position in equities, 30%-40% in fixed income
and 5-10% in alternative investments.
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The scenarios occurred between January 1987 and July 2010.
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In particular, the study concentrates on events that fall more than two standard deviations away from the mean.
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In Gold as a Strategic Asset and Gold as a Tactical Hedge and Long-Term Strategic Asset, the WGC showed
how even moderate allocations to gold (2%-10%) can produce “optimality” in a portfolio, as gold helps increase
the return per unit of risk in a portfolio (i.e. achieving a higher information ratio).

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an ability to protect capital irrespective of market conditions is paramount. Considering portfolio
diversification is clearly important, but protecting against systemic risk can be an entirely separate
matter. This research shows that gold protects against tail risk events, but equally in more positive
times reduces the volatility of a portfolio without sacrificing expected returns.”

The analysis suggests that even relatively small allocations to gold, ranging from 2.3% to 9.0%, can
have a positive impact. On average, such allocations can reduce the Value at Risk (VaR) while
maintaining a similar return profile to equivalent portfolios which do not include gold. Conceptually,
VaR is a way of measuring the maximum amount an investor could expect to lose in a given period of
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time, with a certain degree of confidence, in the case of an unlikely, yet possible, event occurring.

Marcus Grubb, Managing Director, Investment at the World Gold Council, said:
“We now inhabit a world characterised by greater volatility and higher levels of investment risk.
Robust asset allocation strategies are central to a return to financial stability. Gold’s ability to move
independently of most assets usually held by institutions and individuals, and to hedge against
inflation and currency fluctuations, all mean that it is highly effective as a preserver of long term
wealth and should form a foundation of any long term investment portfolio. This report sets out how
gold can protect against negative events, which are not easy to predict but can substantially erode
wealth.”

For a copy of the report please follow this link: www.mediacentre.gold.org

The webcast for the research can be downloaded from:
http://www.marketknowledge.gold.org/audio_video/gold_hedging_against_tail_risk/

ENDS

For further information, please contact:

Stephanie Mackrell, Head of Media Relations, World Gold Council, on +44 (0) 207 826 4763, or
stephanie.mackrell@gold.org

Claire Maloney, Capital MS&L, + 44 (0) 207 307 5341, or claire.maloney@capitalmsl.com

Notes to Editors:

World Gold Council

The World Gold Council’s mission is to stimulate and sustain the demand for gold and to create
enduring value for its stakeholders. It is funded by the world’s leading gold mining companies. For
further information visit: www.gold.org.

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In statistical terms, the VaR of a portfolio, at a given confidence level • , between zero and one, is the minimum
value such that the probability that any other loss exceeds that value is not greater than (1-• ) during a period of
time. Equivalently, it is the maximum expected loss during a specified period of time whose probability is not
greater than • .