I saw this on the gold thread... Standard Chartered, an...

I saw this on the gold thread...



Standard Chartered, an international bank, has a network of over 1,700 branches and outlets and 5,700 ATMs in more than 70 countries globally.

They have recently released a 70 odd page report on the future of gold mining production from 2O11 to 2015.

http://s3.amazonaws.com/iehi-img-mli/files/Standard-In_Gold_We_Trust-20110614.pdf

Some of the main points from the executive summary are:
?? Slow production growth: Most market commentary on gold centres on the direction of US dollar movements or inflation/deflation issues ? we go beyond this to examine future mine supply, which we regard as an equally important driver. In our study of 375 global gold mines and projects, we note that after 10 years of a bull market, the gold mining industry has done little to bring on new supply. Our base-case scenario puts gold production growth at only 3.6% CAGR over the next five years.
?? High cost hurdle: Our IRR analysis of the major gold projects under construction globally reveals that the long-term gold price will need to be US$1,400/oz to justify capital cost. For greenfield projects, the gold price would need to be closer to US$2,000/oz to generate the minimum required return. Escalating costs of building gold mines could result in delays at many projects.
?? Deficit market: The limited new supply comes at a time when central banks have turned from being net sellers to significant net buyers of gold. The result, in our view, will be a gold market in deficit, even assuming flat growth in demand. With the supply-demand balance so out of kilter, we see the gold price potentially going to US$5,000/oz.
?? Our hunting ground ? the juniors: We believe the gold juniors are the best way to play a rising gold price, as they offer good growth at attractive valuations in terms of EV/resource within our universe of 106 gold companies. We think the gold majors, with their low growth, will continue to underperform the juniors, particularly those depending on expensive acquisitions for growth.
?? From our analysis, the regions that could contribute the most to gold mine production growth are Asia (29% of total five-year global volume growth), Africa (23%), North America (17% mainly Canada) and South America (12%).
?? The average grade (weighted by resource size) of the gold mines in our database is 3.5g/tonne, which reflects the grade of the gold reserves. The resource grade is typically lower than the reserve grade.

We conclude that gold production growth will be limited, which will continue to fuel the gold cycle. We believe demand will be driven by continued growth in per capita GDP in China and India, a weak US dollar and high inflation, which have fuelled doubt in the creditability of paper currency. Ironically, central banks, which collectively had been net buyers of gold until 2010, would also be a powerful force driving gold demand.

In the executive summary they also highlight a number of goldies, one of which is Silverlake!

"Companies that offer fast production growth and yet are trading on low EV/resources include Centamin Egypt, Jaguar Mining, Silverlake Resources, Banro, Noble Minerals, Detour, Cluff Gold, G-Resources, etc. A detailed discussion can be found in the next section, ?Investment views and recommendations?.

May explain part of the increase in SLR shares recently.

Overall, very bullish!