Hi GuysI just stumbled on this report by HSBC about Gold...

Hi Guys

I just stumbled on this report by HSBC about Gold Shares!

Attached is an HSBC report released in June 2011 about Gold Mining Stocks moving against the price of Gold since May 2011.

The chart below shows historically that the price of gold miners moves closely with the price of gold.

In recent times this correlation has broken down, due to the following factors.

1. Large Gold Miners production costs have risen due to the resource boom. Yet the price increase of gold far exceeds this cost increase.
2. The instability in world markets affected the gold miners’ share prices.
3. Capital/exploration costs to boost large cap gold miners to find Tier 1 assets has risen significantly, with little to show for the increased exploration costs.
4. Historically Low dividend paying stocks.

The report states that as we move away from the current risk off investment cycle, we will see more money move into gold shares in the back half of 2012 and that this is a good buying opportunity.

The large cap gold miners gross margins have never been stronger, which has resulted in increased dividend payments. Over time the large investment houses will begin to allocate a larger proportion of their investment into the large cap and mid cap gold miners which will lift the sector. As for the small cap gold explorers, they need to continue to drill and increase their gold resource, complete the mining studies to bring this gold resource to life, to lift their share prices. As gold prices are forecast to hover between $1700-2200 per ounce in 2012-2013, their profits and EV Values will increase as well.

Their currently oversold position will exacerbate capital growth as the market turns around in the next 12 months.

It is a very exciting time for IndoChine as they move from an explorer to a developer in 2012 and miner late 2013/early 2014!

Cheers Nectar