Australian Analyst Positive on Gold

Source:

A December quarter survey by Sydney-based Resource Capital Research (RCR) painted a positive picture for gold production in the current global economic crisis with gold becoming increasingly attractive relative to low yield cash and bonds.

A December quarter survey by Sydney-based Resource Capital Research (RCR) painted a positive picture for gold production in the current global economic crisis with gold becoming increasingly attractive relative to low yield cash and bonds.

The report forecast that gold will trade in a range of $US750-$US850/ounce in the next few months but said a "breakout" was possible in the first quarter of 2009 should the $US weaken in that period. Established gold producers have suffered significant declines in their share price in the past three months despite improved fundamentals and while Australian producers have experienced a 32% rise in $A terms, Canada in the same period, in $C denominated terms, had a rise of only 5% while for South Africans the gold price in Rand terms was down 4%.

The RCR" study covers 20 global gold exploration and development companies operating in Australia, Canada, the United States and also based in the United Kingdom.

"The key factor for gold in recent months is not that it has not appreciated significantly, but that it has essentially held its value in a period of a strong US dollar, decreasing inflationary expectations, collapsing oil and commodity prices and aggressive hedge fund selling," RCR said.

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