TOCQUEVILLE ASSET MANAGEMENT L.P. Tocqueville Gold Strategy NCPERS 2017 Annual Conference & Exhibition May 2017 Private and Confidential. For Institutional Use Only. Not for Distribution. Disclaimer This material may not be distributed, published, or reproduced, in whole or in part, without the prior approval of Tocqueville Asset Management L.P. The information presented in this material has been prepared by Tocqueville Asset Management L.P. and/or obtained from sources which it believes to be reliable, however it does not guarantee the accuracy, adequacy, or completeness of such information. The views expressed in this presentation are the opinion of Tocqueville Asset Management L.P. Charts or quotes from other sources have been selected because, in our view, they provide an interesting, provocative or enlightening perspective on current events or the topic of discussion. Their reproduction in no way implies that we endorse any part of the material or investment recommendations that might be included. 2 Tocqueville Asset Management • New York-based, SEC registered investment adviser formed in 1985 • Contrarian, fundamentals-driven investor that specializes in undervalued and out- of-favor assets • Disciplined investment process that seeks to mitigate risk via in-depth primary research and vigilant portfolio oversight • $11.4 billion of assets under management as of 3/31/17 • Privately owned limited partnership is an incentive to excel and a source of organizational stability 3 Tocqueville Gold Strategy Inception 1998 Portfolios • Mutual fund • Separately managed accounts • Private funds AUM as of 3/31/17 $2.1 billion Percentage of Firm Assets 18.4% Composite Returns 9/30/98 – 3/31/17 Tocqueville (Net) XAU Index1 Cumulative 338.1% 43.1% Annualized 8.3% 2.0% 1. PHLX Gold/Silver Sector Index (XAU). Please refer to the performance disclosure statement for full disclosures regarding the Tocqueville Gold Equity Composite. Past performance is no guarantee of future performance. 4 Tocqueville’s View on Gold Reasons to Own Gold • Store of value • No counterparty risk • Low correlation with financial assets Ideal Macro Environment • Growing distrust of financial institutions, politicians, and currencies • Low/negative real rates; bias for inflation • Highly valued financial assets; few alternatives Limited Supply • Limited above ground stocks • Mine supply challenged 5 Gold is a Store of Value Purchasing Power in the United States of Gold and 4. 0000 Selected Currencies (1913=1.0) • Gold has retained its purchasing Reichsmark Gold 1924=1.0 power over the long-term 1.0000 • Paper currencies lose purchasing Swiss Franc power because of governments’ British Pound policies to print money US Dollar 0.1000 Deutsche Mark* – Some policies were extreme and 1924=1.0 their currencies are now extinct 0.0100 Japanese Yen 100-Trillion Zimbabwe dollar note (2008-09) 0.0010 German Mark French Franc* *using Euro 1999-2014 0.0001 1913 1923 1933 1943 1953 1963 1973 1983 1993 2003 2013 500-Billion Yugoslav dinar note (1992-94) 100-Billion German mark note (1922-23) Purchasing power calculated from the implicit price deflator for U.S. GDP and the exchange rates of foreign currencies for U.S. dollars. As of 12/31/16. Source: American Institute for Economic Research, Bloomberg, MeasuringWorth.com. 6 Why Gold Now? • Gold has a low correlation with several categories of financial assets Monthly Return Correlation vs. Gold S&P 500 MSCI EAFE Bloomberg Barclays U.S. Aggregate Bond Index S&P GSCI -1.00 -0.75 -0.50 -0.25 0.00 0.25 0.50 0.75 1.00 Source: Bloomberg as of 12/31/16. 1 Year 5 year 10 Year 20 Year 7 Gold and U.S. Financial Assets • Gold is inexpensive relative to U.S. financial assets Market Value of Above Ground Gold / Dow Jones Industrial Average / U.S. Financial Assets Gold Price Ratio 25% 64 21.8% 19.6% 32 20% 16 15% 8 10% 4 5% 3.5% 2 1 0% 1948 1934 1982 2016 1920 1925 1931 1937 1943 1954 1960 1966 1971 1977 1983 1989 1994 2000 2006 2012 Source: World Gold Council, Federal Reserve, Bloomberg. 8 Gold Equities • Gold equities provide dynamic exposure to the gold price Gold Equities Gold Currency debasement Operating leverage Organic growth (i.e. resource/production) M&A Dividends 9 Active vs. Passive Management • Active U.S. precious metals equity mutual funds have outperformed the PHLX/Gold & Silver Sector Index (XAU) and VanEck Vectors Gold Miners ETF (GDX) – Annual return difference between the average active precious metals mutual fund vs. the XAU and GDX: 20 Yrs. 15 Yrs. 10 Yrs. 5 Yrs. 3 Yrs. 1 Yr. Active minus XAU 2.7% 4.1% 1.3% 0.7% 3.1% -21.7% Active minus GDX - - 2.3% 2.4% 1.6% 0.3% • Volatility of active management returns is also ~15% lower than the XAU and GDX Source: Bloomberg as of 12/31/16. 10 Gold Equity ETFs • Passive gold equity ETFs are potentially approaching capacity limits – The two biggest ETFs represent $18 billion or ~5% of the global gold sector1 – Frequent price deviation from underlying NAV – The VanEck Vectors Junior Gold Miners ETF (GDXJ) recently announced a significant restructuring to alleviate ownership levels and deviation from its benchmark 1. As of 04/12/17. Source: VanEck. 11 Life Cycle of a Gold Mining Stock • Tocqueville uses its intensive research to identify investment sweet spots Higher risk Lower risk Discovery Development Production Value Investment sweet spots Valuation Parameters Geologic Potential Ent. Value/Au Reserve Ounces Ent. Value/Production Ent. Value/Au Resource Ounces Price/Net Asset Value Price/Net Asset Value Ent. Value/Au Reserve Ounces Price/Cash Flow Price/Cash Flow References to securities or investments should not be considered recommendations to buy or sell. Past performance is not a guide to future performance. Securities that are referenced may be held in portfolios managed by Tocqueville or owned by principals, employees, and associates of Tocqueville, and such references should not be deemed as an understanding of any future position, buying or selling, that may be taken by Tocqueville. 12 Gold Production • Mine lives in the gold sector are currently at historical lows Source: Scotiabank. 13 Portfolio • The portfolio is built to balance risk and return – Significant opportunities exist in smaller, earlier-stage mining companies – >50% of the asset base, on a look-through basis, is located in North America Historical Allocation by Company Underlying Asset Base* Top Ten Holdings* Size/Type* As of 3/31/2017 % of Assets Canada Physical Gold 11.9% Mexico >$8 Billion (Senior Producers): 25% Franco-Nevada Corp. 4.8% 21% USA 29% Australia Pan American Silver Corp. 4.5% $2-8B (Mid-Tier Producers/Advanced Developers): 40% Brazil Alamos Gold Inc. 3.9% 2% 20% Burkina Faso Torex Gold Resources Inc. 3.7% $0.5-2B (Small Producers/Developers): 25% 2% 2% 3% DRC Fresnillo PLC 3.5% 3% 3% Philippines <$0.5B (Early Developers/Exploration): 10% 5% 10% Detour Gold Corp. 3.2% Turkey Newmont Mining Corp. 3.2% Mali B2Gold Corp. 3.0% Other MAG Silver Corp. 3.0% *Please refer to the performance disclosure statement for full disclosure information. References to securities or investments should not be considered recommendations to buy or sell. Past performance is not a guide to future performance. Securities that are referenced may be held in portfolios managed by Tocqueville or owned by principals, employees, and associates of Tocqueville, and such references should not be deemed as an understanding of any future position, buying or selling, that may be taken by Tocqueville. 14 Performance • Tocqueville Gold Equity Composite has outperformed the gold price and Philadelphia Gold/Silver Sector Index (XAU) over the long-term Cumulative Net Performance Since Composite Inception 1050% 950% Composite 850% Gold Philadelphia Gold/Silver Sector Index (XAU) 750% S&P 500 650% MSCI World Materials 550% 450% 350% 250% 150% 50% -50% 09/98 09/99 09/00 09/01 09/02 09/03 09/04 09/05 09/06 09/07 09/08 09/09 09/10 09/11 09/12 09/13 09/14 09/15 09/16 As of 3/31/17. Please refer to the performance disclosure statement for full disclosures regarding the Tocqueville Gold Equity Composite. Past performance is no guarantee of future performance. Source: Tocqueville Asset Management, Bloomberg. 15 Composite Net Annual Returns 125% 100% 75% 50% 25% 0% -25% -50% YTD 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Tocqueville 18.5% -11.2% 21.0% 72.8% 52.8% -9.6% 28.8% 36.6% 12.0% -35.8% 88.2% 55.7% -17.4% -9.7% -49.9% -4.8% -25.8% 42.2% 9.7% XAU 6.5% -22.5% 7.6% 43.4% 44.0% -7.7% 30.6% 12.5% 22.9% -27.7% 36.6% 35.9% -19.2% -6.7% -48.0% -17.3% -33.4% 74.9% 6.5% As of 3/31/17. Please refer to the performance disclosure statement for full disclosures regarding the Tocqueville Gold Equity Composite. Past performance is no guarantee of future performance. 16 Performance Disclosure Statement Past performance is not indicative of future results. 1. Tocqueville Asset Management L.P. (the "Firm") is a U.S. based registered investment advisor, which offers investment advisory services to individuals and institutional investors. 2. The Firm claims compliance with the Global Investment Performance Standards (GIPS®) and has prepared and presented this report in compliance with the GIPS standards. The Firm has been independently verified for the periods January 1, 2002 through June 30, 2006. The verification reports are available upon request. Verification assesses whether (1) the firm has complied with all the composite construction requirements of the GIPS standards on a firm-wide basis, and (2) the firm’s policies and procedures are designed to calculate and present performance in compliance with the GIPS standards.