Gold Webinar

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GOLD DONT DISCOUNT THIS PRECIOUS METAL YET.
Speakers Chirag Mehta, Senior Fund Manager,
Alternative Investments Ghazal Jain, Associate
Fund Manager, Alternative Investments April 16,
2021
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A Quick Recap..

• Gold had one of its best runs ever in 2020 thanks
  to heightened risk sparked by Covid-19 monetary
  and fiscal pandemic relief
• Breakthroughs in vaccine development since
  November, along with optimism of economic
  recovery, however, sent gold prices lower
• Since the start of 2021, gold has been under
  further pressure as the dollar and US bond yields
  have strengthened
• Golds fall in 2021 has been surprising
  considering passing of fresh Covid-19 relief of
  1.9 trillion in the US
• The resulting dollar debasement should have sent
  gold rallying. But the opposite seems to have
• happened so far
• Prices are supported as the Federal Reserve has
  assured markets of no change in its
  accommodative monetary policy

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Risk Assets are Rallying..
This is in spite of rising yields which should
ideally result in lower asset prices
SP 500
Bitcoin
Data as of 13th April 2021 Source Investing.com
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5 Reasons Why You Shouldnt Discount Gold Yet
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Risk Uncertainty
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One Year On, The Pandemic Lingers On..
New waves and variants of Covid-19 continue to
take a toll on Global Economic Recovery
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Vaccine Rollout A Slow Start
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Has Gold Finally Bottomed?
Both the dollar and bond yields have started to
climb down from their multi-month peaks reached
in March
10-Year US Treasury Yield
US Dollar
Data as of 13th April 2021 Source Investing.com
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Yields
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Yield Curve Control on The Horizon

• The Federal Reserve has a lot of incentive for
  stemming surging Treasury yields
• Nominal yields in the US have been on the rise
  expecting higher inflation to trigger tapering by
  the Federal Reserve
• But the central bank has denied any tapering in
  its bond buying or hike in interest rates any
  time soon. The bank wants to see inflation above
  2 before unwinding
• Rising yields increase borrowing costs for
  companies and consumers which could put a dent in
  the economic recovery
• Equity markets could react negatively to higher
  yields as plugging a higher interest rate to
  determine long-term cash flows results in lower
  valuations for most stocks
• Rising interest rates also increase the debt
  burden for governments
• Going forward, it is possible that the Federal
  Reserve may opt for Yield Curve Control and
  impose interest rate caps on longer maturity
  bonds. Thus, we dont expect a runway increase in
  yields beyond 2

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Golds Sensitivity to Real Interest Rates
Though higher nominal rates are creating
headwinds for Gold, part of this will be offset
by inflation
US 10 YEAR NOMINAL TREASURY YIELD US 10 YEAR REAL TREASURY YIELD
JAN 2021 0.93 -1.08
MARCH 2021 1.74 -0.63
CHANGE IN 3 MONTHS 81 BASIS POINTS 45 BASIS POINTS
Despite their recent increase, nominal interest
rate remain historically low real rates across
developed markets remain negative. This means
non yielding Gold has potential to perform well.
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Negative Rates make Holding Gold more Attractive
Lack of yield on fiat currencies supports gold
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2250
10
2000
8
1750
6
1500
4
1250
USD

2
1000
0
750
-2
500
-4
250
-6
0
1995 2000 US Real interest rate
1970
1975
1980
1985
1990
2005
2010
2015
2020
Gold price
Data as of March 2021 Source Bloomberg
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Rising Debt Currency Debasement
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Governments too Dole out Trillions of Dollars of
Fiscal Stimulus
Value of fiscal stimulus measures as a share of
GDP
Country Budget deficit as of GDP 2020-21 Budget deficit as of GDP 2019-20
India -9.5 -3.8
UK -16.9 -2.6
France -9.2 -3.1
Germany -4.8 1.5
USA -4.6
EU -0.5
Source TradingEconomics.com
Source Statista Data as of March 2021
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In A Bid to Boost the Pandemic Stricken Economy,
Governments have Run Up their Debts to
Unsustainable Levels
Global debt levels soar to second World War
levels
Median debt-to-GDP ratio of country grouping
based on G20 advanced and G20 emerging
economies Data as on December 2020. Sources
Financial Times, IMF historical debt database
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Central Banks on A Printing Spree to Buy
Government Debt
Relentless money printing by central banks
undermines confidence in fiat currencies,
benefitting gold
Trillion
60
10
55
9 8 7 6 5
50
45
40
35
to GDP
30
4 3 2 1
25
20
15
10
0
5
0
US -FED
JAPAN - BOJ
EU -ECB
CHINA - PBOC
1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
2012 2014 2016 2018 2020
Data as of March 2021 Source Bloomberg
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Gold is a Monetary Asset Gold has kept up with
money supply growth
1600 1400
US Money Supply M2
Gold prices
1200 1000 800 600 400 200
Rebased 100
0 1974 1976 1978 1980 1982 1984 1986 1988 1990
1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
2012 2014 2016 2018 2020 Data as of December
2020 Source Fred Past performance may or may
not sustained in future
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Rising Deficits Debt in the US are Making the
Dollar Vulnerable
Weakness and falling confidence in the dollar
tends to strengthen gold
Data as of September 2020 Source
fred.stlouisfed.org
Data as of December 2020 Source
fred.stlouisfed.org
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Inflation
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Higher Inflation is on its Way
Gold will be a preferred asset as it generally
moves in line with inflation and has potential to
preserve purchasing power
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Data as of December 2020 Sources Louis Fed,
lynalden.com
Data as of February 2021 Source Bloomberg
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INR Depreciation
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INR is Back to its Depreciating Trend
The Indian rupee has been appreciating since
start of 2021, hurting INR gold prices The
appreciation in the rupee was primarily due to a
positive economic outlook for India and robust
fund flows in Indian equities by FIIs The flows
seem to be slowing down or reversing now with
the second wave of Covid-19 striking India and
hurting its economic outlook with resulting
partial lockdowns. In addition, the RBIs
Quantitative Easing has also put pressure on the
currency The currency could now be back to its
gradual depreciating trend, giving a push to
domestic gold prices
Data as of 13th April 2021 Source Investing.com
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Gold Should be Back on Track After a Bad First
Quarter
Headwinds Tailwinds
Accelerated vaccine rollouts Lingering pandemic with new waves and variants
Economic recovery Accommodative fiscal and monetary policies
Rising bond yields Higher inflation
Strengthening dollar Rising deficits and debt
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Suggested Action Plan
For Investors who already have 10-15 allocation
to Gold
For Investors yet to allocate 10-15 to Gold

• Stay put and watch gold play a risk-reducing,
  return enhancing role for your portfolio

• Prices have fallen from 2020 highs, its a good
  time to build your allocation

• Invest 50 lump sum right now to benefit from
  lower prices, and stagger and accumulate the
  remaining 50 over the next 6 months

Please note that the above is the suggested fund
allocation only and is not to be considered as
investment advice/ recommendation. Please seek
independent professional advice and arrive at an
informed investment decision before making any
investments.
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Solutions to meet Sustainable Development Goals
SGD-17
SMILE
WHAT IS SMILE?
THE SMILE STORY
OUTCOME SO FAR
SMILE was born out of our desire to support
credible NGOs and create a steady stream of
money flow for them
Since 2018, Quantum MF investors have supported
7 NGOs from diverse sectors via the SMILE
facility
SMILE enables Quantum MF investors to contribute
10 of their investment in eligible schemes to
charities vetted by HelpYourNGO
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SMILE Process Flow
INVEST IN SMILE FACILITY Q Long Term Equity Value
Fund Q Equity Fund of Funds Q Dynamic Bond
Fund Q Multi Asset Fund of Funds Q Gold Savings
Fund Q Liquid Fund
DONATE TO NGOS
DONATION RECEIPTS
HelpYourNGO sends donation receipts and
80G Liaises with NGO grantees Monitors reviews
Donated to NGOs selected by investors and
vetted by HelpYourNGO
Investors receive periodic program reports from
HelpYourNGO on the NGOs supported by them
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Product Label
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Product Label
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Product Label
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Disclaimer Terms of Use
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for the readers. This presentation has been
prepared on the basis of publicly available
information, internally developed data and other
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has been suggested or offered based upon the
information provided herein, due care has been
taken to endeavor that the facts are accurate and
reasonable as on date. Quantum AMC shall make
modifications and alterations to the performance
and related data from time to time as may be
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Readers are advised to seek independent
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modifications and alterations to the performance
and related data from time to time as may be
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Quantum Trustee Company Private Limited.
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fund investments are subject to market risks,
read all scheme related documents carefully.
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Appendix
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Global Market-Moving Themes
Accommodative Federal Reserve Expanding
Vaccine Rollout Fresh round of US Fiscal
Stimulus
Strengthening Dollar Dent in Economic
Recovery Taper Tantrum in Equity Markets
Rising Government Debt Higher
Inflation Expectations
Lingering Pandemic Long Road to Recovery
Rising Bond Yields
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Whats Moving Gold

• NEAR TERM WEAKNESS
• Reduced safe haven appeal worst of the
  pandemic is behind us expanding vaccine
  rollout
• Rising yields increase the opportunity
• cost of holding non yielding gold
• Stimulus and reflation trade fueling stock
  markets
• Surging dollar benefitting from optimism about
  US economic recovery and rising yields
• INR appreciation

• MEDIUM - LONG TERM STRENGTH
• Rising inflationary pressures due to pent up
  demand stimulus
• Even though yields are rising, they are
• still at historically low levels
• Stock market vulnerability to central bank
  policy tapering
• Rising debt and deficit in the US to reduce
  dollars appeal
• Revert to long term trend of INR depreciation