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Kiernan suggests Chinese
fiscal decisions back gold

Michael Kiernan of Monarch Gold Mining has told a Perth
conference that he believes China has the target of moving 20
percent of its foreign reserves into gold.

22/05/07.  Michael Kiernan, Monarch Gold Mining's Executive Chairman,
considers that China's decision to increasingly move its overseas foreign
reserves to gold from multiple currencies and less reliance on the US
dollar, will see unprecedented demand for the metal in the next two
decades. Addressing the second day of the 2007 Paydirt Australian Gold
Conference in Perth, Kiernan said he believed that although China did not
publicize its intentions, it had set a target of having 20% of its foreign
reserves in gold.

"This has to be put in context as only 1.2% of China's official reserves are
currently represented by gold," Kiernan said. "Yet the country has
overseas reserves totalling $1.3 trillion. You only have to do the sums to
see what impact that will have on supply through converting 20% of that
investment into gold to hedge against currency volatility."

Kiernan said China's current and planned foreign reserves position was in
stark contrast to major industrial nations. He predicted a strong future for
gold and a gold price hovering between $650/oz and $700/oz.  However
should his forecasts on China be correct one would expect a very
considerable upside over this kind of level.

"The price outlook is solid as the supply of gold has basically been
constant for the past 10 years or so, there have been sales from central
banks and mine production has basically gravitated down in recent years.

"The annual demand for gold is around 4,000 t/y historically and while
jewellery has temporarily fallen off, net sales have climbed as investment
in gold hoarding has increased, particularly in India. China will ensure the
supply demand gap widens as that country's gold purchases rose to 270 t
in 2006 and its 1.3 billion consumers are spending more on gold jewellery
than ever before."