67 WALL STREET, New York - June 29, 2009 - The Wall Street Transcript has just published its Gold and Precious Metals Report report offering a timely review of the sector to serious investors and industry executives. This 99 page feature contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.
Topics covered: Supply and demand - Skilled labor shortages - Equipment delays - The movement of inventories - Jewlery inventories - Operating margin - Valuation - Consolidation - Silver - Gold - Investment demand
Companies include: Kinross Gold (KGC); IAMGOLD (IAG); Red Back (RBI:TSX); Centamin (CEE:TSX); Osisko Mining (OSK:TSX); Yamana Gold (AUY); Eastern Platinum (ELR:TSX);Goldcorp (GG); Silver Wheaton (SLW); NovaGold (NG); Goldcorp (GG); Royal Gold (RGLD); Franco-Nevada (FNV:TSX); Allied Nevada (ANV); Midland (MD:TSX); Virginia Mines (VGQ:TSX).
In the following brief excerpt from the 99 page report, Ken Gerbino, head of Kenneth J. Gerbino & Company, discuss the outlook for the sector and for investors.
TWST: What is the status of the precious metals market right now?
Mr. Gerbino: The status is as follows; money managers, sovereign wealth funds, and investors globally have lost some or a majority of the faith and trust that they have had in major financial institutions, politicians and governments regarding economics and the future. Therefore, gold, which has never gone bankrupt and has never defaulted and has always had a reputation as a safe monetary substitute and an inflation hedge, has now become in the forefront of everyone's minds for a portion of their wealth or investment funds. Also, I might add, gold allows investors a piece of mind from an insurance standpoint in the event their monetary and economic events get out of hand. Even though that is a low probability, one also doesn't cancel one's insurance policy if you feel having an accident while driving would be low probability. Now, when one adds in the possibility of just 4% to 5% inflation rate taking place, and extends 4% or 5% increase in the price of gold - which at these price levels is somewhere between $50 and $60 an ounce - year-after-year, mining companies benefit from this dramatically because once the capital has been expended to put a gold mine in production, the next 20 years or so is strictly extraction costs. Therefore, this major capital expense is fixed and one can benefit from the higher price of gold going forward where the margins are increasing.
TWST: Do you think the precious metals market is going to continue doing well over the next year or so?
Mr. Gerbino: I think gold will be in a trading range of somewhere between $850 and $1,250, probably for the next year or two or three. The next big move up in gold will occur because of inflation coming back from all the money that's been created to bail out the banking institutions in most countries in the world. The bottom line is more money equals higher prices. That is a trend that history attests to over thousands of years.
TWST: Are the actions of the current Administration going to keep prices of precious metals high?
Mr. Gerbino: First of all, it didn't matter who got elected. It didn't matter if he was a conservative, a liberal, a Democrat or Republican. Whoever got in that office had no choice. They were going to have to borrow and print, etc. to bail out the system. But because of that, precious metals should be in everyone's portfolio.
TWST: Is that always true that when countries start printing money, gold and precious metals become more valuable?
Mr. Gerbino: They should, but there is a lot of lead and lag times involved in this. So, I think over a longer trend, you can bet that the prices of these monetary substitutes/investment/inflation hedges, which will be gold and silver, will go up. So, I think over the next five or 10 years, you will see much higher prices of both metals. In fact, you are going to see higher prices of just about everything because not only did a motorboat show up at the island, but a flotilla arrived and they have these high-speed printing presses on this flotilla. So the islanders are in for a big surprise.
The Wall Street Transcript is a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs and research analysts. This 99 page special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online .
The Wall Street Transcript does not endorse the views of any interviewees nor does it make stock recommendations.