Lone Star Gold Inc. (OTC: LSTG)
, an Albuquerque, New Mexico-based company, is engaged in the exploration and development of gold and silver. LSTG is strategically focused on proven, stable precious metal regions in America and Mexico.
Gold prices have risen to record high this year as an uncertain economic environment in the U.S. and Europe, coupled with rising inflation in emerging markets, boosted demand for safe haven assets.
Demand for gold has risen sharply in emerging markets, which are facing high inflation. Gold is seen as a natural hedge against inflation, and more and more investors in these countries are looking to move some of their money into gold.
Gold exchange traded funds (ETFs) have further boosted the demand for precious metals in the developed, as well as emerging markets.
But the major reason behind gold’s steep rise this year has been the uncertain economic environment in the developed world. The debt crisis in euro zone and the weak U.S. economic recovery have contributed to the uncertain economic environment in the developed world.
In Europe, the debt crisis has escalated in the last few weeks, with Italy, the third largest economy in the euro zone, seeing its bond yields rise to an unsustainable level. The debt crisis in Europe has put question marks over the future of the euro, which only a few years ago was seen as a possible reserve currency. The debt levels in the U.S. are also at a very high level and country has already seen a credit rating downgrade.
In such an environment, gold prices are expected to remain robust. According to Deutsche Bank, gold prices could reach $2000 per ounce next year. That does not look impossible, considering that gold is trading above $1,700 an ounce currently and much of the factors which contributed to sharp rise this year still remain intact.
Lone Star Gold Could Benefit from Rising Gold Prices
With gold prices continuing to rise, Lone Star Gold holds a great deal of promise.
LSTG is currently focusing on the La Candelaria gold-silver project located in Chihuahua State, Mexico. LSTG has a 70% working interest in the La Candelaria project, which consists of 800 hectares of mining concessions.
Recently, Lone Star Gold commenced first stage drilling at La Candelaria. LSTG expects to commence a second exploration and drilling stage in mid-January 2012 based on the first stage drilling results.
According to Daniel Ferris, President of Lone Star Gold, the company is now in the position both in terms of data and financing to move forward with the next stage of clearly determining the full economic potential of the La Candelaria property.
Lone Star Gold also has an option to acquire a 70% interest in the Ocampo project, another gold and silver project. The Ocampp Project includes the San Luis and La Colorada properties in the municipality of Ocampo located 192 miles from the capital city of Chihuahua in Chihuahua State of Mexico. The project consists of 570 hectares of mining concessions.