Gold Weakness Creates Buying Opportunity

The current weakness in gold could be a prime buying opportunity for investors, according to Raymond James analyst Paul O'Brien. Gold prices hit a rut in the second quarter, posting a 2.2% downturn from the previous quarter, averaging US$668 an ounce.

According to Raymond James analyst Paul O'Brien, gold prices should reverse the downward trend in the near term, rising to US$670 an ounce in the third quarter of 2007 and US$730 in the fourth quarter.

Year-to-date, gold prices gold is up 2.1% while gold equities measured by the S&P/TSX Global Gold Index are down 17% for the year.

"Generally, we have seen flat to declining returns in 2Q and 3Q with peak returns in 4Q over the last six years of the bull cycle," Mr. O'Brien told clients. "We would recommend this window of weakness as a point of entry into the gold equities followed by profit taking in the later part of 4Q."

Within his coverage universe, Mr. O'Brien rates Agnico Eagle Mines (AEM) an "outperform" with a C$57 price target, Alamos Gold Inc. (AGIGF.PK) an "outperform" with a C$9.75 target, Eldorado Gold Corp. (EGO) a "market perform" with a C$7.75 target, Goldcorp Inc.(GG) an "outperform" with a C$39.75 target, Meridian Gold Inc. (MDG) an "outperform" with a C$42.50 target and Yamana Gold Inc. (AUY) a "strong buy" with a C$22.25 price target.