The Gold Report

"The anticipated trading range for gold over the next few months is US$750/oz to US$850/oz.

Many juniors with feasibility study stage gold projects would find that currently their share price is at a level where they are required to raise an equity component of project funding capital that is similar or greater than their market capitalisation. Similarly, at current share prices and with strong local currency gold prices, projected price/earning multiples if the project proceeds are likely to be very low. This means effective cost of equity capital (in terms of earnings dilution to existing shareholders) can be very high. Many junior companies will need to choose between the cost of equity capital and the cost of doing nothing (i.e. batten down the hatches and wait for an improvement in debt and equity markets). With strong gold prices in local currency terms, companies with advanced projects are likely to wear the high cost of equity in order to achieve the ultimate goal of production. . .

We believe that with the deteriorating outlook for the U.S. economy, concerns over on growing debt levels, and the costs of banking sector and industrial sector bailouts, there is a possibility that the U.S. dollar could peak in the first half of 2009, and then fall heavily as U.S. productivity growth slows. This scenario increases the flight back to gold as a safe haven – possibly taking gold back over US$900/oz. The gold price has seen a steady increase over the past 3 years. . ."(12/08)