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Gold Prices Will Not Come Down In The Near Term, Says Analyst at Deutsche Bank; Find Out His Reasons Why In This Exclusive Interview

67 WALL STREET, New York - December 20, 2011 - The Wall Street Transcript has just published its Gold and Precious Metals Report offering a timely review of the sector to serious investors and industry executives. This Gold and Precious Metals Report 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: Endeavour Silver (EXK); Alacer (ASR.TO); Apogee Silver (APE.V) and many more.

In the following brief excerpt from the Gold and Precious Metals Report, interviewees discuss the outlook for the sector and for investors.

Jorge Beristain, CFA, is an Analyst at Deutsche Bank Securities Inc., where he focuses on metals and mining equity research in Latin America. Mr. Beristain has been ranked in Institutional Investor's survey as the number two Analyst in the metals and mining industry and also is ranked in the pulp and paper industry. Before joining Deutsche Bank, Mr. Beristain worked at ABN AMRO Bank N.V. He was also a Management Consultant specializing in the pulp and paper and environmental engineering sectors in Mexico and Canada. Mr. Beristain holds Securities Principal and Supervisory Analyst licenses.

TWST: We spoke about a year ago, and your commodity team was looking for gold to go to $1,450 or better, and it has done that. Where do we go from here?

Mr. Beristain: The latest forecast has come off a little bit. The bank's commodity team out of London a few months ago was calling for gold to be as high as $2,000 an ounce on average for 2012. We since pared back our estimates about three months ago to $1,900, but still roughly $150 higher than where we are today and still supportive for gold equities. I think from this point forward, given that gold tested already the $1,800 mark a few months back, it's not so much the absolute number that gold gets to from this point forward, but if investors start to form a belief that gold will at least sustain in the $1,700 to $1,900 range in the next few years - that really does change materially the outlook for these equities. I think the thought process for a lot of investors prior to the summer spike was that gold was somehow going to reach a "peak" level and then collapse. But since the collapse happened, gold has clawed its way back to the high $1,700s, and I think that's giving people some faith that perhaps we're not going to the capitulation that has been feared.

TWST: Given this background and the global economic uncertainties, why shouldn't gold come down?

Mr. Beristain: Because gold is probably the one true currency in the sense that it cannot be manipulated. What we have seen are actions on behalf of central banks that continue to view the printing of money as the solution to a lot of economies' problems out there. In fact, we recently have seen statements from the Bank of Japan that they are again going to try to manage down the relative value of the yen to the U.S. dollar as their currency's value is too strong for them to maintain export competitiveness. We've seen over the last year the drama play out in Europe over the Greek debt crisis. Again, the solution there seems to be print more euros. Obviously, in the U.S., we've already had two rounds of quantitative easing, and at this point the door remains open to more of the same. Even the Swiss franc, during the summer, there were statements by their central banker chief that he was basically going to manage or peg the relative value of the franc to the euro, which until then had actually been appreciating vis-a-vis the euro. So by basically threatening to buy as many euros as necessary to keep the Swiss franc exchange rate down, and then in turn the euro itself weakening through the summer, he accomplished his goal. So I would say, generally speaking, that there has been an inflationary uptrend in the printing of money from major world economies. The trend is clear, most of the world's central banks are either trying to manage down the relative value of their currencies and in the case of both the U.S. and Europe, print more money to fund gaps in the country budgets and/or plug the capitalization in their banking sectors.

TWST: Is there no end in sight for this kind of response going on?

Mr. Beristain: Not for the time being. Conversely, we have not seen the response from the lenders of money to demand higher interest rates. So despite the fact that some currencies are being managed downward, investors seem to be willing to take low or even negative real interest rates. So that's a fairly supportive environment for gold - the continued financial problems that many economies have faced combined with governments printing more money or outright seeking to devalue their currencies to maintain relative competitiveness. So on that basis, gold really becomes the one true barometer of worth in the world because you can't go out and print new supplies.

TWST: Given these uncertainties, what are central banks doing at this point with their gold holdings or purchases?

Mr. Beristain: On that front, things have gone a little bit quiet through the fall, perhaps a function of recent market volatility not just in gold, but across all asset classes. Through the summer, we had seen some high-profile purchases. The central bank of Mexico had purchased 100 tons of gold in 1H11. Korea purchased 25 tons in June, and Thailand had noted it purchased 53 tons between 2010 and 2011. Recently, some of the concern has shifted to, what if some of the central banks become sellers of gold? We have seen some hesitancy or resistance perhaps from China to ride to the rescue of Europe, so perhaps some countries that have a lot of gold, such as Italy, could be in a position to sell some of that gold to foreign creditors as a way to reduce their debt loads. I don't know if we're entering a new period here where, ironically, the harder the financial problems of some of these countries to square the government spending become, it could lead to some selling of some crown jewels, i.e., the accumulated gold that they've saved up over centuries.

TWST: But no sign of that happening yet.

Mr. Beristain: No sign. It is something, in fact, I have been reading snippets about - Germany has basically said this would not be an option. We're also not hearing any firm suggestions of that from governments in Europe, but it is a question I have received from some investors. In the interim, we have not heard any real strong one-way remarks from further central bank purchases in the second half of the year. In the absence of that, I'd say that the central bank purchasing or selling has gone fairly quiet. I believe it would be a worrisome signal if central banks started to liquidate their gold, especially developed markets as central banks are still very large holders of the metal. However, I do think it would probably, ultimately, take the form of a transfer from central banks of overindebted nations to lending banks perhaps in less developed markets or that hold less relative gold but are long paper currencies, so indirectly a further way for them to diversify into gold. I'm not saying levered nations would necessarily sell gold through open market transactions and depress the gold price, but it would be concerning if we did start to see Greek or Italian central banks offload their gold without clear signals that this was being done in an off-market and organized way.

TWST: Going to the other side of the equation, the supply side, what's this going to do to production?

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