Kestrel’s strategy for growth and shareholder value is to define, acquire and systematically explore quality mineral exploration projects in areas where there are sound geological models for exploring for sizeable exploration targets. This will be in regional belts and geological terranes where world class deposits have already been found in the past and/or where there is good evidence that the potential for a significant discovery is yet to be realized. New ground in such areas which has either been, ‘tied up’ for various reasons, or has been overlooked in terms of evolving models and newer exploration technologies, that we ourselves can apply, is of particular interest to us. We seek mineralization that in the very least is relatively accessible, relatively high grade and relatively low in cost to permit for and ultimately mine (pending favourable results) and which is situated in politically stable regions.
We feel our properties in the heart of the Klondike in the Dawson range and within the prolific Tintina Gold Belt, which extends from the Yukon Canada through to Alaska USA (where ‘giant’ gold deposits are present), certainly have the potential to fit all of the above criteria. And we aim to build on our holdings in this region in the very near term.
In acquiring more projects (not just in the Yukon), Kestrel plans to focus on precious metals but also on other mineral assets that fall within the criteria of our growth strategy that we deem of excellent potential value. We are unashamedly bullish on gold in both the near and long term, and below are just some of the reasons why:
Please note that the following information expresses the views and opinions of Kestrel Gold management and it is not intended as investment advice. Kestrel Gold is not licensed as an investment advisor.
- History has proved time and time again that gold is a store of wealth, a fungible and indestructible financial asset used to hedge against a drop in value in other financial assets.
- With universal acceptance providing a liquid form of saving compared with other physical and financial assets, gold has consistently delivered a lower average volatility than most mainstream assets and commodities.
- The world has too much debt, debt that cannot be rolled over continuously. The 'solution' to the unfolding debt crisis, many feel, will involve even more government QE policy with a resultant continued rise in gold price.
- After the banking and credit crisis of 2008 when the resulting global fallout expanded to become a major sovereign debt and currency crisis, the importance of increasing gold reserves was recognised by most key central bank participant countries.
- In order to diversify currency risk, the major central banks throughout the world are now buying gold, a trend which is gaining momentum. Having been a source of significant supply to the gold market for two decades, central banks became net buyers of gold in 2010.
- Excluding ETF’s China and India’s combined demand for gold has risen from 23% of global market share in 2002 to 47% in 2011 (Source: WGC 2012).
- The volume of Chinese gold reserves rose 166.9% between Q1 2000 and Q4 2009. At 1.6% of total reserves at the end of 2009, this is at a very low level when compared with the western world, suggesting that there is ample scope for further growth (Source: WGC 2010).
- Even with the historical strong cultural affinity towards gold, today the gold market in China is still in a developing stage with only a decade since the policy of liberalisation was introduced. Ten years ago it was illegal for an individual to own gold in China. In 2009 the central government remarkably removed all restrictions.
- India is the world’s largest consumer market of gold, and will remain pivotal to the global gold market. India’s demand for gold in 2010 accounted for 32% of global consumer demand at 963 tonnes (Source: WGC 2010).
- Gold is an integral part of both China’s and India’s long cultural traditions. Purchases of gold jewellery are considered as a form of liquid and tradable investment for the accumulation of wealth. Once these two economies resume previous GDP growth rates, with a combined population of 2.56 billion and percentage of a more affluent middle class ever increasing, the long term outlook for gold seems very positive.
- Globally gold is broadening significantly in its scope of application with rising demand. In 2002, 80 per cent of gold was bought as jewellery, five per cent industrial and five per cent investment. By 2011, gold demand for investment purposes had jumped to 40 per cent (Source: WGC 2012).
- Since 2003, investment has represented the strongest source of growth in demand for gold. The last five years to the end of 2011 saw an increase in value terms of around 534 per cent. (Source: WGC 2012).
- Global ETF (exchange traded funds) holdings of gold have shown a remarkable increase in the last eight years, increasing from negligible amounts to over 2400 tonnes of gold in Q2 of 2012. Many ETFs require the actual physical backup of gold bullion.
- Despite this growth, the current value of above-ground gold is estimated to be around 2 per cent of the aggregate value of the world's financial assets. Institutional investors are still highly underweight gold in their portfolios.
- Globally, near term supplies of gold are not expected to be able to meet near term demands for gold. Along with the declining discovery rates, costs are rising, mines are depleting and production is falling.
“Worldwide, the total gold in reserves and resources at development-stage projects is essentially equal to that in currently producing mines. However, with increasing risk of political, regulatory, and tax instability in many resource-rich nations, declining grades, rising costs, and dramatically longer development times, the amount of gold available for production in the near term is likely far less than has been found” (Source: MEG Strategies for Gold Reserves Replacement: The Costs of Finding and Acquiring Gold July, 2012).