Gold in the Investment Portfolio

By Maanan R Desai Head International Office

CitiGold Corporation Ltd The Australian Gold Mine

Types of Investment
Physical Metal

Gold ETF's

Gold Mining Stock g

Physical Metal

Jewellery Gold Coins Tola Bars Kilo Bars

Gold Investment Practices in India

Indians Love PHYSICAL GOLD. Current private holdings are more than 25,000 tonnes h ld in form or jewellery, Coins and Bars. h 25 000 held i f j ll C i dB Gold is in the Indian Culture Gold is a form of storing wealth Traditionally, Indians bought gold in the form of jewellery that served dual purpose Jewellery as well as investment but over the past few years a new trend is emerging wherein in the Bars , Coins Purchase is growing growing.

Fluctuations in Gold Prices make Indians move towards Jewellery . bars & Coins Purchase especially days before festivals . Age Old Traditions to Systematic Investment in Gold over a period of ti f time (M faces less amount of opposition from f il members (Man f l t f iti f family b to buy Gold . Awareness of Gold prices Investment in Gold for Life : Wedding, Children, Property purchase, & EMERGENCY.

Exchange Traded Funds ?????????????

Exchange Traded funds are open Ended Index funds g p that are listed and traded on exchanges like stock equity based on the Price of the metal . ETF are mainly in Gold, Silver , Platinum and Palladium besides others . They are listed in major stock exchanges.

Gold ETFs ETF s

Gold Exchange Traded Funds (GETF):

Gold ETFs is designed to provide returns that, before expenses, expenses should correspond to the returns provided by Gold in the spot market.

ETF ADVANTAGE
Like an Index Listing.
track s the asset Value Open Ended Mutual Fund O E d dM t lF d Low Expenses Ratio Low Turnover

Like a stock.
Trading flexibility intraday on the exchange g y y g Real time price close Short term traders are not subsidized by long term investors

World Scenario
Gold ETFs was a huge success worldwide with 10 GETFs Trading on 11 E h Exchanges with Total Value of Gold holding more than ith T t l V l f G ld h ldi th $15bn. (as on 24th July 2007) Now higher !!!!!!! and Growing.. Name of Gold ETF N f G ld
Gold Bullion Security Australia Lyxor Gold Security listed on LSE, Eurinext, Paris, Borsa Italiana & Frankfurter Wertpapierborse (Deutsche Borse) kf b ( h ) Street Tracks Gold ETF listed on NYSE & Singapore New Gold Bullion Debentures Listed on JSE, SA I shares Comex Gold Trust listed on NYSE ZKB Gold ETF listed on Switzerland GOLDDIST listed on Istanbul Stock Exchange GoldBeES (Benchmark AMC), Goldshare (UTI AMC) & Kotak Gold (Kotak M F) listed on the National Stock Exchange India

AUM (tonnes) ( )
12.48 93.10 497.15 13.92 45.91 21.7 1.3 3.36

ETFs on NSE
1.

2. 3. 4. 4 5. 6. 7. 7 8.

Nifty BeES Bank BeES Junior Nifty BeES Liquid BeES Gold BeES UTI Sunder UTI Gold Share G ld Sh Kotak Gold ETF

Needs in ETFs ETF s

Small denomination For Retail to the Common Man Cost efficiency No holding cost or other cost Need for physical deliveries Transparency in costs and charges LiquidityLiquidity- can be sold anywhere. Tax Efficiency Preferable N t in D P f bl Not i Demat f t form or th through Brokers b t available at hB k but il bl t Post Office and Exchange house n Banks . Most impthey are derivatives backed by gold and not outright or titled titl d ownership of physical bullion. hi f h i l b lli Nature of Ownership and Intermediation of ETF

MINING EQUITY
Todays format of holding mining stock
Client Services
Client Services / Register Watch / Holder Search / Balances Company Name: CITIGOLD CORPORATION LIMITED Holder Name: Mr Kumar Holder Identifier: I0030000000 Today's Date: 30 Oct 2007 Holder Address Address PO BOX 28692 DUBAI UNITED ARAB EMIRATES ARE Balances as of 30 Oct 2007 Select Date: Security Class FULLY PAID ORDINARY SHARES UNL OPT EX 19/09/08 @ $0.37

30 Register NSW NSW

Oct Balance 284,289

2007 Price AU$0.41 33,743

Value AU$116,558.49

Mining Equity- Formula EquityNever pay more t a 10% o t e g oss value o e e o e than 0% of the gross a ue of the metal in the ground as advised by mining analyst. 10 million ounces @ US$780 per ounce = illi US$7.8b @ 10% - US$780m @ 650m shares = US$1.20 per share 50 m/ozs = what will the value of the share be??? Gold @ US $ 1000/oz = ??? Gold production @ 250,000 Ozs/yr @ 50% profit

Top 10 Gold Producers (in tonnes)

Country South Africa Australia United States China Peru Russia Indonesia Canada Uzbekistan Papua New Guinea Sub Total Rest of the world Total Top 10: 72% of Total Output Source: GFMS Production 291.8 244.5 251.8 247.2 203.3 172.8 114.1 104.0 78.5 60.4 1,768.4 702.6 2,471.0 Rest of Companies Total Top 10: 44% of total output *one tonne = 32,151ounces Companies Barrick Gold Newmont Mining AngloGold Ashanti Gold Fields Harmony Navol MMC Freeport McMoran Goldcorp Zijin Mining Buenaventura Country Canada USA South Africa South Africa South Africa Uzbekistan USA Canada Chaina Peru Production 2006 2005 268.8 184.9 175.3 126.3 72.9 58.2 53.9 52.7 49.3 48.1 1,090.4 1,380.6 2,471.0 169.8 199.7 191.8 130.6 80.5 59.0 86.8 35.3 45.7 56.4

Mine Production 2007

Source Gold News

Gold Production Costs (US$)

Gold Production Costs (US$) 2006 2005 200 year-toyear-to-year increase in % 2005 to 2006 to 2004 Australia Cash Costs Total Cost Canada Cash Cost Total Cost South Africa Cash Cost Total Cost United States Cash Cost Total Cost Other Cash Cost Total Cost 327 433 323 433 381 459 357 430 268 348 282 359 258 332 363 415 278 338 221 294 16 21 25 30 5 11 28 27 21 18 6 10 19 15 3 4 11 8 12 12

World

Cash Cost Total Cost

317 401

271 339

17 18

7 8

PRICE IN MARGIN
Gold Price
Extraction costs

$780
$400

Margin & Growing

$380

approx 50%

Performance and Risk Associated with Gold Companies C i

Geopolitical shift : from traditional to emerging countries new mines, lower costs, higher political risks Quality and experience management Access to financing ccess a c g Size and grade of projects - economically exploitable Development process from: inferred resources PrePre-feasibility bankable feasibility study Valuation of resources/reserves : ranging from $ 20 - >$400 per ounce Joint J i t ventures with major acquisitions consolidation t ith j i iti lid ti

Your Gold Portfolio

Returns

Physical Gold Returns ?? Spot y p ETFs Returns ??? % lower than Spot ETF R l h S Mining Stocks ?? With margins of 50% the company makes , your stocks automatically appreciate h h than Gold Spot . higher h G ld S Max leverage on gold price.!

Gold is the only asset class that is not somebody else's liability y y y

Deflationary depressions are characterized by many bankruptcies and defaults. The only assets you can count on are those in your own possession that are liquid, like cash or gold. Sound currencies such as gold become more valuable because so much is wiped out in l bl b hi i d ti defaults and wholesale wealth destruction. The price of gold can never go to zero unlike the value of multinational corporations and banks.

Gold i th lti t G ld is the ultimate safe haven asset f h t and the only currency which cannot be printed or debased by desperate g governments. Inflationary y depressions, however, wipe out the currency itself which lose value itself, because the government Print more to bailout the financial system. Gold system benefits from this brutal process.

Conclusion Invest a minimum of 10% of your money in Gold ,to get Maximum Leverage from your Gold Investment & Protect from Inflation .

Thank You .

Thank You