UBS: Bullish on Gold and Silver

One of the best performing assets of 2008 is expected to have another good year in 2009. Despite adverse moves in three of gold’s most powerful drivers – a stronger U.S. dollar particularly against European currencies, the sharp decline for crude oil and rapidly falling inflation – UBS has increased its forecasts for gold and silver as it sees both investor and speculative interest boosting prices, even as jewelry demand falls and the U.S. dollar strengthens.

Its gold price targets for 2009 and 2010 move from $700 per ounce for both years to $1000 and $900, respectively. UBS’s silver forecasts climb from $8.40 and $8.95 per ounce to $14.75 and $12.80, respectively.

UBS strategist John Reade told clients:

Purchases of physical gold have jumped over the past six months as investors’ fears about the current financial crisis and the possible outcomes from government efforts to support banks and economies have intensified.

The European bank estimates that investment demand will double in 2009 compared to 2007, which will drive gold to an average of $1000. It expects this safe haven buying to decline in 2010.

Based on the implied returns from these changes, UBS upgraded Agnico-Eagle Mines Ltd. (AEM), Barrick Gold Corp. (ABX), Eldorado Gold Corp. (EGO), Newmont Mining Corp. (NEM) and Goldcorp Inc. (GG) from “neutral” to “buy,” while maintaining “buy” ratings on Centerra Gold Inc. (CAGDF.PK) and Franco-Nevada Corp. (FNNVF.PK).

The firm also noted that precious metals remain its preferred investments in a commodity context and it anticipates that gold and platinum equities could continue to outperform. It favours names like Impala Platinum Holdings Ltd. (IMPUY.PK), Barrick and Goldcorp.

Comments

[PeteK:]

You should have talked about all these 2 months ago.
That shows how slow you guys are.
Keep it up please.
The world is moving faster than you are.

Feb 05 04:20 AM

[phdinsuntan...:]

this was the sell signal
I was waiting for gold,
thank you GOLD men,
the next big thing will
be the increase in
sovereign bond yields
to cover the bailouts now,
waiting a pullback if any,
to go long TBT now

Feb 05 06:30 AM

[JGL:]

It is ironic!
UBS (Wealth Management) in its first 2009 Investing newsletter, published on January 9th, wrote against investing in Gold. Since then Gold went up ca. 25%. This confirms the value of these so-called experts!

Feb 05 08:31 AM

[Ian R. Camp...:]

While I think UBS’s gold forecasts are directionally correct in 2009, UBS analysts must believe the U.S. economy will recover in 2010. I seriously question this will happen given ongoing negative economic events announced almost every day, and as a result think UBS is directionally wrong in its 2010 forecast. I have no comment with respect the UBS silver price forecast for either 2009 or 2010, as I find silver a far more complex metal than gold to analyze from a demand/supply point of view, and currently have no opinion on the silver price.

If interested, you can visit my blog at stockresearchportalblo... and read other commentary on both gold and silver.

Feb 05 10:51 AM

[ROLEX18:]

I went short LIHIR and ABX now, regarding the UBS bullishness you must be nuts, they are the sell side in the metals that's why they are always bullish.
Look in the GOOG search for their past articles when Platinum was 2300$, Palladium 540$, Gold 1030$, Silver 21$ the UBS were bullish even more.
They are physical metals trader and very big guarantor in OTC metals clearing transactions same as they manage ETN's that are milking investors money from the difference they buy metals on the futures exchange and pass it in their ETN's for a premium from this price that can be even 10% in less liquid metals.
Gold is a very good sell at this price, I also bought DZZ.

Feb 05 02:14 PM

[Mayascribe:]

Jimko: Bingo! The whole sector's up, way up! Many mining stocks since November 19th are up over 100 percent! I have some that are up way over 100%!

Where else can someone find that in this crazy market!

And I would not sell a share to "take profits."

Check out miningnerds.com if you already haven't. The site's clunky and in Canadian dollars, but what you can do with it to compare mining stocks is pretty cool.

Feb 05 05:57 PM

[Old Bailey:]

Gold above 200-day as is Silver, trade the trend. Platinum heading for it s 200-day.(reversion to mean)
Trading the strongest trend makes sense, my thoughts buy into strength, banks would have been sold 2 years ago using this simple system.

Feb 17 11:50 AM