August 22, 2011

 

Dear Friend,

 

With gold prices consistently making new records we decided to do a gold supply and demand analysis. We analyzed the future production potential of 25+ gold miners and meticulously modeled additions and subtractions from production on a company by company basis. Our analysis resulted in an estimated 17.3% increase in gold production over the next 5 years.. At the same time we analyzed demand trends and estimate a 15% growth in non-investment gold demand over the same time period. This implies that investment demand for gold would only need to increase by 2.5-3% over the next 5 years in order to compensate for the natural supply and demand imbalance.

 

We viewed this as a likely scenario and as a result increased our gold price forecast in this week’s spot market report. Our previous scenario was $1,525 per ounce in 2011, $1,500 in 2012 and $1,200 for 2013 onward. We revised this scenario to $1,700 per ounce in 2011, $2,300 per ounce in 2012, $2,000 in 2013, and $1,500 for 2014 onwards. We have attached our full analysis.

 

Sincerely,