First Fuel, Now Metals - Forecasts Lowered 18 comments
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Yesterday it was oil and natural gas, today it is precious metals. UBS has again lowered its 2009 forecast for gold, this time from $825 per ounce to $700, while also cutting silver sharply from $15.08 and $12.58 in 2009 and 2010 to $8.40 and $8.95.
“The revised UBS commodity price outlook reflects an extended recessionary scenario with base metal prices in both 2009/2010 that are mostly below the marginal industry costs and current spot prices,” the investment bank said in a report. “If such a recessionary scenario were to unfold, we believe that almost all North American mining companies could experience challenges to liquidity and/or business continuity."
Platinum saw a $200 per ounce reduction for those years to $900 and $1100, respectively.
UBS has also adjusted its base metals forecasts. Most significant for gold equities, copper moved from $2.50 and $3.00 per pound to $1.30 and US$1.55.
“UBS believes gold will remain under pressure in 2009 from a combination of slowing demand for jewellery and disinvestment as inflation slows,” the report said. “Silver forecasts have been lowered sharply to take account of the dramatic underperformance of silver compared to gold in recent months. Platinum forecasts have been reduced to reflect exposure to weak auto sales in 2009/2010 due to a deeper global slowdown.”
As a result of these changes, its 12-month price targets for gold companies in its coverage universe fall by an average of 35%.
UBS analyst Brian MacArthur told clients that gold companies with primary listings in the U.S. have historically received a higher valuation. He highlighted Newmont Mining Corp. (NEM) and Barrick Gold Corp. (ABX) as the best examples of this, but also Goldcorp Inc. (GG). He also said companies that get a greater proportion of their revenues from non-gold sources tend to trade at a significant valuation discount.
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This article has 18 comments:
Look for that posting a few lines down. :)
Hey Bush, it's "...fool me once shame on you, fool me twice shame on ME!!!!"
consider this before taking them seriously...
The USD is on a raging bull run, it can only go up from here "Every day we seem to reach a permanent new high for the USD"
nor would i read much into the lack of physical gold's supply to the market. if you give it much thought, you will realize that this is orchestrated to fire up demand.
we all are being played right now by the talking heads who have something to gain by us buying things. no talking head is telling us to sell anything - in fact they are saying it is time to buy.
this is a time to get into defensive positions to wait and see what will happen next.
Since the very first irrelevant posting above complained about "gold bugs.." I'll follow up with some facts..
1. The premium on 1 oz Eagle or Mapleleaf gold coins is over 7%..IF ONE CAN FIND A RELIABLE SUPPLIER
2. The premium on 1 oz Eagle silver coins is almost 50%...and most suppliers are SOLD OUT....
So...the paper spot price can meander where it likes..the boots on the ground investor deals with another very different "REAL" price..
It's as if the average home price in an area was $150K..but, oh, by the way..one can't really be bought for that price!
The old high in the last 10 years was 1.20, if it goes up 40% from here in a single day, it will go up to that level.
Geo, have you noticed the influx of new postings from new handles who don't have a clue?
Most seem to be negative regardless of topic. On this article, as you noticed, it appears to have gathered a bunch of "Bush/corporate" whackers who really don't say much of anything other than the system is Bad, Bad, Bad.
The Change, Change, Change people are out in droves. I've been egging them on for about a week now.
Some have no idea that Republicans are the GOP, others think Barack Obama's middle name is Hussien, that Hussein is a misspelling. All corporations are bad.
The one post that really got me, was one that said all GOP members should finally pay their fair share.
The Basic thing that they don't seem to realize: every one that has pierced any body part to install anything,
Owns Gold. So if the redistribution of wealth does occur under Obama, we will have a massive increase in Gold demand.
However when the economy craters with massive deflation like now, paper money holds up very well, preventing any flight to gold. However, even without extra demand, you would expect gold to hold its value . Right now all assets are falling in price, but gold is holding its value or dropping slowly depending on which currency you talking about. So gold remains the asset of choice, but only AFTER cold hard cash.
If on the other hand, we end up with inflation, where paper money starts seeking its intrinsic value (zero), gold is known by everyone as the investment of choice. Governments would print more gold if they could, but since they can't, it only needs to hold its value to go up in price. But if the inflation gets bad enough, heavy demand will outstrip all supplies and the price will really shoot up.
Central banks will try to moderate its price, but with demand shifting from promises (paper gold) to physical gold, they won't be able to (they lease their gold in the paper markets, but won't sell the actual bars). We easily return to the 1980's peak of $2100/oz (inflation corrected) then perhaps higher if this period is worse.
Of course, this is never a good thing, even if you're a gold bug. Everything else you own, like your house, will be in the crapper. Its a little like a home owners insurance policy. When your house burns down you get a big check, but your house is still gone.
Me, I'm going to CONTINUE TO ACCUMULATE GOLD AND SILVER until I can't find any more, period! You see, I look at it this way. I tried the market (for my retirement) and lost mid six figures in 2000-1 thanks to my broker/advice.
I have been accumulating gold/silver since. Now, how do you think I am fairing? Buying on the dips is a no brainer!
Good luck!
Here in Alaska, the GOP is the predominant party. Something like 70% voted Bush lin 2004. Also heavy libertarian base. You'd think that those ideals would manifest themselves in being against "redistribution of wealth". Well we are and we are not. We are in theory, and in ideology, and whenever our taxes go to someone elses project. Such as when we resent the poor, the unemployed, the uneducated....these people should not get our wealth, that much is clear. Why should they? They didnt work for it, and it encourages them to be lazy. So, we are aghast at our taxes used to reditribute wealth to the undeserving.
But, our new rock star govenor, Sarah "Marerick" Palin has sucessfully stood up to oil companies (translation: she raised taxes on them) and she successfully increased this years dividend to include a supplemental $1200 dividend, in addition to the regular $2000 dividend (amounts are rounded).
Its not just hypocrisy, its pandering, buying votes, dishonesty, and utter nonsense to say that the GOP is against the redistribtution of wealth. (at least in Alaska).
True story, I am not making this up as Dave Barry says: My family received $9600 from the state of Alaska this year just for being a resident. Money was redistributed from the oil compnaies to the residents, no matter what the need.
Palin is a fine socialist.
What they should say in the Lower 48, if they were honest is that: "we are agaisnt the redistribution of wealth to those we decide are not politically to our advantage to reward." Or, we are against the redistribution of wealth to those we decide don't vote heavily for our canidates" or "we are against redistribution of wealth for those we decide are undeserving, and for redistirbution of wealth to those we believe are deserving."
Oh, and by the way, those who are deserving are those who need a bailout--those job creating and upstanding bankers who currently are a little short. We can redistribute some wealth to them, thats ok, because they are deserving.
See?
And please dont respond that it isn't a bailout of taxpyers dollars because the governement will be paid back, and probably make a profit to boot. (as a Barrons editorial has recently claimed ). After all is said and done the best economists are predicting a 1.5 trillion price tag--for all costs from the current crisis. Some of that costs will be recouped, but not all...
and thats redistribution baby.
If you decide to vote, vote for Chuck Baldwin... Look him up.
The tax cuts have been reduced from the $250,000 cap to $120,000 or less. Eventually they will target Obama's base only. Think of it as the 21st century War on Poverty.
To tell you the truth, decreasing taxes on the poorest Americans would receive my vote. We have all suffered from the non-existent inflation, but they have really been reamed. But pushing it as Us versus Them is not the route to go. Hell, we donate money all over the world and internally after natural disasters. The donations are tax deductible.
Why not keep those outgoing no return dollars home. Create a Tax deductible fund for our poor and help them until new higher paying jobs are created which enable them to gradually get out of the abyss.
IMHO
UBS can go suck an egg then!
what do those silly banks know about pending inflation that i don't?
lots.
ladies and gentlemen, place your bets
High School student studies hard all year, avoids peer pressure to go out, manages to get an A. Take another student who for gets a D for whatever reason. Should the A student give up that A so that the D student can get a C?
Guess what the resounding response was? No, No, No.