SOURCE: Lone Star Gold Inc.

September 06, 2011 08:30 ET

Lone Star Gold Inc. Provides Gold Industry Overview & Outlook

ALBUQUERQUE, NM--(Marketwire - Sep 6, 2011) - Lone Star Gold Inc. (OTCBB: LSTG) ("Lone Star" or "the Company") is pleased to provide an overview of the gold industry as well as forecast targets made by various industry analysts and experts.

"Our goal here is simple," said Daniel Ferris, Lone Star's Company President. "To offer a compilation of third-party information that may prove helpful for individuals that are either contemplating entering gold-related investments or who are already shareholders in such investments. And with the demand and price of gold so consistently continuing to climb, such information is certainly of value right now."

GOLD DEMAND & PRODUCTION

Demand for gold spans multiple sectors, from the aesthetic (69% of gold is used for jewelry and the arts), to the industrial (9% is used in electrical and electronic applications), and other uses (22% is used in dental, investment, and other sectors). Beyond the diverse range of demand for gold, the metal also represents tremendous value. In the case of the U.S., the value of mine production in 2010 (~230 metric tons) was ~$8.9 billion while Mexico's ~60 metric tons of mine production was valued at ~2.32B.[1]

GOLD DRIVERS & INVESTMENT

Despite the consistent appeal of gold over the centuries, relatively new drivers are boosting the metal's value and, in turn, global demand. Among the most significant of these new drivers is investment demand. Since 2001, gold has gained every year on increased investment demand, from both institutional and retail investors, and across such forms as bullion, coins, and ETFs.[2]

Underlying the surging investment demand is a desire to seek safe havens by hedging against the uncertainties of paper currencies, particularly in the current global economic environment. Prominent hedge fund managers such as John Paulson (Paulson & Co) and David Einhorn (Greenlight Capital) have invested heavily in gold with the expectation that central banks and governments will not be able to effectively remove the extraordinary stimulus policies established during the financial downturn.

Beyond investment demand, other gold drivers include inflation increases that correspond with increases in the price of oil, and the recurring threat of eurozone sovereign debt issues.[3]

On Friday's (2 Sept) close Spot gold was up 1.23% percent at $1,900.00 an ounce. It is one of this year's best-performing commodities, up by more than a third in 2011 to date.

European shares recently fell on concerns that the United States could be set for recession after Friday's weak payrolls data, while German Bund futures hit record highs ahead of a series of challenges in Europe this week.

Standard Bank analyst Walter de Wet said a court ruling due Wednesday that may reduce the freedom of the German government to finance rescues of crisis-hit countries like Greece was supporting interest in safe-haven gold, while a European Central Bank meeting on Thursday will be closely watched.

"There is a growing expectation in the market that we will have to get some policy response from the ECB at some stage," he said. "Whatever that will be, it is more likely to be positive for gold than not."[4]

PAPER CURRENCIES UNDERMINED

With the paper currencies undermined almost daily by the threat of further quantitative easing across the globe and by downgrades on Sovereign debt, the flight to the one currency not undermined by the folly of politicians, that is to say gold, looks set to continue. We expect to see gold increase in value to more than $2000 oz by Christmas and to head higher throughout 2012. As such, investors are now starting to wake up to the incredible value of gold equities.

GOLD FORECASTS

CIBC was the latest investment bank to raise its gold price forecasts, and now sees the yellow metal reaching $2,200 per ounce by 2013.

In a report published recently, CIBC World Markets analyst Barry Cooper lifted his average gold estimates to $1,625 from $1,550 in 2011, and to $2,000 from $1,700 in 2012. He also introduced a $2,200 estimate for 2012.

"With the recent debt issues in both the U.S. and Europe, and weak economic data coming out of both sides of the Atlantic, we believe the safe haven characteristics of gold will again play an important role in the performance of the metal," he wrote.[5]

ADDITIONAL INFORMATION
To learn more about the gold industry, the Company, and regular news updates, visit Lone Star Gold's official website: http://www.lonestargold.com.

ADDITIONAL INFORMATION
To learn more about the La Candelaria project, the Company, and regular news updates, visit Lone Star Gold's official website: http://www.lonestargold.com.

ABOUT LONE STAR: Lone Star Gold, Inc. is a publicly traded (OTCBB: LSTG) gold exploration and development company based in Albuquerque, New Mexico. The Company's aggressive acquisition and exploration approach is strategically focused on proven, stable precious metal regions in America and Mexico. Currently, Lone Star owns concessions covering 800 hectares in the La Candelaria project in Chihuahua, Mexico, which the Company is evaluating to determine the potential sites that represent the best potential for silver and gold deposits.

ON BEHALF OF THE BOARD OF DIRECTORS,

Lone Star Gold, Inc.
Daniel Ferris, Company President

(OTCBB: LSTG)

This press release contains statements that are forward-looking and which involve a number of risks and uncertainties. Such forward-looking statements are within the meaning of that term in Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. The forward-looking statements in question are based on Lone Star Gold, Inc.'s current expectations and projections about future events, based on information currently available. The forward-looking statements found in this press release may also include statements relating to Lone Star Gold, Inc.'s anticipated financial performance, business prospects, new developments, strategies, and similar matters. Lone Star Gold, Inc. provides no assurance regarding the actual outcome of the events contemplated by any forward-looking statements included in this release. Lone Star Gold, Inc. disclaims any obligation to update any of its forward-looking statements, except as may be required by law.

SOURCES:
1 U.S. Geological Survey Mineral Commodity Summary (Gold), 2011
2 Bloomberg website, Apr. 19, 2011
3 Financial Times website, Apr. 18, 2011
4 Reuters website, Sept 5, 2011
5 Gold Alert website, Sept 5, 2011

Contact Information

  • Contact:
    Lone Star Gold, Inc.
    6565 Americas Parkway NE, Ste 200
    Albuquerque, New Mexico
    87110
    USA

    INVESTOR RELATIONS
    Toll Free: 1-800-986-9358
    E-mail: ir@lonestargold.com
    Web: www.lonestargold.com