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Gold Producers Aim To Raise ROE To Compete With ETFs: Goldman Sachs on Gold Stocks

67 WALL STREET, New York - November 7, 2012 - The Wall Street Transcript has recently re-published its Gold and Precious Metals Report Report offering a timely review of the sector to serious investors and industry executives. This special 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: Investment and Central Bank Demand - Dividends Dependent on Gold Prices - Gold Producers vs. Gold ETF - Midcap and Small-Cap Consolidation Activity

Companies include: Barrick Gold Corporation (ABX) and many others.

In the following excerpt from the Gold and Precious Metals Report Report, an expert analyst from Goldman Sachs discusses the outlook for the sector for investors:

TWST: Some people are looking for a rally in gold. Is that what we're going to see from here?

Mr. Preston: Look, I think the gold price is going to fluctuate really around sentiment in Europe, firstly. And then that I think flows into the U.S. dollar, euro and other currencies, depending on moves in exchange rates. I think if we continue to have a period of uncertainty around the debt crisis in Europe, then gold will do well in that sort of a climate. And every time people think that there is going to be some resolution, we start to see a little bit of strengthening in currencies, the appeal of gold dissipates a little bit.And in particular, as you get people moving into the U.S. dollar as the best of the best in terms of fiat currencies, that is always a little bit negative on gold. But broadly I think gold - that there are more positives for gold than there are negatives. And in particular, the fact that central banks are buyers of gold now, individuals are voting with their feet buying gold. So I think that tells you that people are still concerned about preservation of wealth.

TWST: Central banks, for years, have been net sellers. What's changed that posture?

Mr. Preston: One of the arguments why central banks were net sellers was that gold had no real impact on foreign reserves held by central banks and it wasn't earning any interest as part of their foreign reserves, and so therefore, why would you want to continue to hold gold? Whereas really the reality now is that most currencies have got very low real interest rates, and so therefore the desire to hold currencies, in particular the U.S. dollar, has been waning. And if you look at the percentage of foreign reserves held by global countries or countries globally, they have all moved up overtime. Now they haven't necessarily been buying a lot of gold - I mean, the emerging markets have been buying gold, but because you've had a depreciation of the rest of the reserves relative to gold, the percentage of foreign reserves held as gold has actually gone up quite significantly. And I mean it's quite illustrative that if you think of the European Union, all the signatories to the so-called Washington gold accord, you know, 54% of their reserves are held in bullion.

TWST: Is that growing now?

For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.