Weaker Expectations for Gold and Silver - TD Newcrest Analyst

Expectations for weaker industrial demand and growing mine supply has forced TD Newcrest to cut its gold and silver price forecasts.

The research firm now expects gold to average $850 per ounce in 2009, down from $1,100 previously. TD also cut its 2010 and 2011 targets from $975 and $900, moving to $800 for those years and beyond.

Its target for silver plunges from $20 per ounce next year to $10.40, from $18 to $11 in 2010, $16.50 to $12 in 2011, and from $14.50 to $12 long-term.

TD’s gold and precious minerals analysts said in a report:

While both gold and silver have been conferred status as precious metals, the relatively significant usage of the silver or ‘white metal’ in industrial applications suggests sluggish physical demand during a period of economic retraction.

At the same time, industry surveys suggest significant growth in mine output as silver projects enter full production. These include Coeur d’Alene Mines Corp.’s (CDE) Palmarejo mine and Goldcorp Inc.’s (GG) Penasquito project, both in Mexico, and Kinross Gold Corp.’s (KGC) Kupol property in Russia.

The revised metal price forecasts and reduced multiples have produced lowered estimates and target prices for the mining companies in TD’s coverage universes. However, it considers gold equities “significantly oversold” relative to gold itself based on their ten-year price relationship. TD analysts also said gold equities appear to be discounting a gold price of approximately $455 per ounce – a discount of roughly 40%.

Comments

[HBWOW:]

TD Newcrest analyst statement is only a acknowledge of the massive
manipulation of gold pricing by cash cow foreign countries (China and Japan) to use their US foreign trade dollars to buy gold/gold mining stocks cheaply. They need more gold reserves to eventually back their tons of fiat paper money.
Simple as that.

2008 Oct 23 12:01 PM

[capt Brian:]

Well, when does the big and in the know guys buy? When things are down, all selling, and the investment in question is available cheap. I'm buying... anyone want to sell me silver at spot price before the election, lemme know

Capt B

2008 Oct 23 01:22 PM

[bowman711:]

Who cares what the PRICE of gold (or silver) is? What is important is the VALUE of gold relative to the rest of the economy. How much is gold down when compared to the stock market? The DOW & S&P-500 are down about 40% while gold is down 30%. How many companies will/are going bankrupt, leaving the stockholders with nothing? Every day we hear of familiar companies calling it quits. Gold can't go bankrupt, and has never been worth nothing. Which investor is in the safer position, the stockholder or the goldholder?

2008 Oct 23 04:01 PM

[Econ 101:]

And who can get delivery of gold or silver? The paper market is a lie and being manipulated. It just isnt clear to me who is doing the manipulation. Is it China and India or our own government. Maybe the boys from Goldman ?

2008 Oct 24 11:25 AM