The Wall Street Transcript has just published its Gold issue, a report offering a timely review of the sector to serious investors and industry executives. This 88-page feature contains a roundtable panel and industry commentary through in-depth interviews with top management from 22 firms. This issue also contains an “Off the Record” Review of Management by Management. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

This is the strongest seasonal period for physical gold demand. Topics include: Outlook for gold prices, Impact of gold ETFs, Demand for gold jewelry, Gold/dollar relationship, M&A activity, Emerging markets demand, Production growth outlook, Central bank sales decline, Gold dehedging, Increased capital expenditures, Returns on invested capital, Junior exploration companies, Problems at South African mines, Volatility of gold stocks, Investor concerns, Cost escalation issues, Stock recommendations, Stocks to avoid.

Companies include: Barrick (ABX), Newmont Mining (NEM); Yamana Gold (AUY); Agnico-Eagle (AEM); Eldorado Gold (EGO); Gold Fields (GFI); Randgold Resources (GOLD); Centerra Gold (CG.TO); streetTRACKS (GLD), Banro Corporation (BAA:AMEX) (BAA.TO), Canasil Resources Inc. (CLZ.TO), Acadian Gold Corporation (ADA.TO), Agnico-Eagle Mines Limited (AEM), Amerigo Resources Ltd. (ARG.TO), Atlas Mining Company (ALMI), Brett Resources Inc. (BBR.TO), Canyon Resources Corporation (CAU), J-Pacific Gold INC. (JPN.TO), Karmin Exploration Inc. (KAR.TO), Linear Gold Corp. (LRR.TO), Macmillan Gold Corp. (MMG.TO), Marathon PGM Corporation (MAR.TO), Maximus Ventures LTD. (MXV.TO), Nemi Northern Energy & Mining Inc. (NNE.A.TO), New Jersey Mining Company (NJMC), Noront Resources Ltd. (NOT.TO), North Atlantic Resources Ltd. (NAC.TO), Orezone Resources Inc. (OZN), Semafo Inc. (SMF.TO), Sirios Resources INC. (SOI.TO), Tiger International Resources Inc. (TGR.TO), Analysts Include: Victor Flores, HSBC Securities (USA), John Hill, Citigroup Global Markets, Paul O’Brien, Raymond James & Assoc.

In the following brief excerpt from the 88 page report, the roundtable panel discusses the price outlook for Gold over the coming year, and prospects for investors.

TWST: Paul, what’s been driving the ups and downs in the gold prices this year?

Mr. O’Brien: It’s the fourth quarter, and it’s no secret that it is the strongest seasonal period for physical gold demand, so we’re seeing a ramping up here, about $100 or so in the last month or two. And in recent days, the euro has absolutely been on fire and has also been dictating gold price increases this year as that relationship seems to be coming back again, versus perhaps earlier in the year, when it was noisier items that were perhaps geopolitical or oil-driven. Those types of items overshadowed the more traditional drivers for gold that we have seen in years past.

TWST: Victor, what is your take on what has caused all this volatility?

Mr. Flores: I think that Paul has hit it pretty well on the head here. The early part of the year was quite noisy and the market was trying to figure out whether gold was following the energy complex or perhaps the base metals markets, which were quite robust. And perhaps there was, to a certain extent, a situation where gold was being dragged along by some of the commodity-linked products that are out there, such as the Goldman Sachs Commodity Index, where the predominant driver is the energy complex but as metals and gold are part of that product, gold just got dragged along for the ride.

Early in the year, we also had a situation where some of the rather aggressive hedge buybacks that were going on helped move the price up and attracted further investment. More recently, it really looks like we’re back to the more traditional inverse relationship between gold and the dollar, with the strength of the euro relative to the dollar attracting investors to gold.

Mr. O’Brien: We also saw the launch of the silver exchange traded fund, and ahead of that, silver was ramping up immensely and was the tail wagging the dog, meaning gold was following the silver exchange traded fund or expectations of it as the silver market did see the effects that the gold ETFs had on the gold market. The streetTRACKS (GLD) doesn’t seem to be stopping – it’s above 14 million ounces now on the GDL alone, and it’s hit an all-time high again. So investment demand is still strong out there.

TWST: Where do we go from here, Victor?

Mr. Flores: Our view at HSBC is that the dollar will continue to weaken and we are looking for the US dollar/euro exchange rate to go to 1.45 by the end of next year, so that would support a material strengthening in the gold price. We are actually looking for an average next year of $660 an ounce, which, given where the price is today, may not sound like a big deal, but this year’s average will be somewhere around $605 an ounce. So that’s a 10% year-on-year increase, which we think is actually fairly material.

TWST: Paul, what’s the scenario that you see for 2007?

Mr. O’Brien: We are still a bit more conservative. Obviously gold does trade in a very volatile range throughout the year. The year to date is around $605 or $610, despite being up around $730 and even down around $540. So it is a very volatile, wide range. We have taken a bit more of a conservative stance in our modeling and target setting, and are expecting just shy of $600 an ounce for next year.

TWST: What do you see that’s going to hold it down to $600?

Mr. O’Brien: I think that there are a lot of factors that are driving gold currently. The euro is part of one of probably two pretty strong arguments. Say a couple years ago, in the morning, you could go to your Bloomberg, pick up the COMEX net long position and what the euro did overnight, and you could have a pretty good idea of what gold was going to do that day. We have seen that relationship come and go. Talking about some of those noisy items that we mentioned earlier, gold has been tacking itself on to various relationships. During that time, it was oil and gold. What do we see? Oil decreasing and gold being dragged along with that. So it looks like it’s bouncing from relationship to relationship as opposed to tacking on to one and increasing on that.

TWST: So it’s whatever the hot item or statistic is at a given point in time?

Mr. O’Brien: Well, not to base all fundamental analysis on that, but of course you cannot model things like geopolitical events, etc., and call the gold price exactly. But we do think, going forward, that it’s obviously going to be relationship to relationship as we saw throughout this year. We do see a strengthening toward that euro/gold relationship (we have seen the trend recently), and we do believe, like most out there, in a weakening US dollar.

TWST: John, as we look out at 2007 and 2008, what’s the pattern that you’re looking at?

Mr. Hill: We think it will be more of the same. We see fabrication demand fortifying the downside, investment demand responding to macro catalysts, be it weak dollar themes or other flavors of financial distress and causing the gold price to work higher. Again, the year-to-date average is about $603. We’re looking for $700 per ounce average in 2007 and $750 in 2008. That’s the way we think that it will play out.

TWST: With that upward bias, what does that mean for this marketplace? Are we going to continue to draw investors in?

Mr. Hill: I think we will, but also understand that a lot of the debate about the behavior of the equities relative to the bullion is ultimately about the demographics of the demand for gold. The point is that there is a lot of demand for physical gold around the world, with very little of it coming out of the United States or Western Europe. From a macroeconomic perspective, it’s actually been a very hostile environment for gold in recent years. The economy has been growing well above trend, both in the US and globally. Inflation is low. Interest rates are low. The Dow is at a record high. Unemployment is the lowest since our parents entered the workforce. There has been a massive rally in real estate and a massive rally in fixed income. This has just not been a good environment for safe haven assets on the face of it.

However, gold is essentially a tiny market with three motivated buyers and no sellers. So it has very anomalously tended to follow the pro-cyclical basic materials (steel, aluminum, copper, and things like that) – follow those materials higher. But that’s unusual. We think that the real excitement in gold, of course, will come in an environment where there is a bit more financial stress and where gold’s true safe haven attributes come to the surface. The point is that that is going to start from a base of $600 plus, as opposed to starting from a base of $250.

TWST: Paul, as you look out, is there anything that is going to make this a more attractive area?

Mr. O’Brien: For the gold equities, obviously the gold price is going to be a main driver here going forward. From that, I believe fundamentals on a net basis are going to be improving going forward.

TWST: Given that, where should investors be looking? Should they be looking at gold, gold equities, or ETFs?

Mr. O’Brien: Equities will get you a bit more bang for the buck, depending on where you go. A lot of the mid-tiers that I am covering are exhibiting excellent growth profiles going forward. I would be highlighting some of these mid-tier growth names versus some other names at the moment.

TWST: What are some of the names that you would put at the top of your list?

Mr. O’Brien: Names like Yamana (AUY) and Agnico-Eagle (AEM) would be two at the top there. Eldorado (EGO) just started another mine recently. They just announced a gold pour. Those are our growth type names going forward.

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 88-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.

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