Analyst: Leverage to Gold Price Should Benefit Companies

Wellington West has hiked its annual gold price forecast for the next few years and beyond by $100 per ounce. The firm’s target for 2008 is now $800. It is $775 for 2009, $750 for 2010 and $700 for the long-term. The move reflects a weaker-than-expected U.S. dollar.

In terms of production however, analyst Catherine Gignac said there is a limited supply of new gold. And while several deposits could be developed in the next three to five years, “non-operating pressures and more thorough evaluation tends to prolong the timeline,” she said.

Companies with leverage to the gold price should benefit, but a weak U.S. economic outlook will hit all equities and cause volatility, she told clients in a note.

“The dramatic rise in the gold price in recent weeks is likely to pull back, however, a higher base platform has been established,” Ms. Gignac said, adding that a $200 per ounce (plus or minus) swing for gold prices is expected.

Among the names she said will benefit (ranked in terms of their leverage to gold prices) are Crystallex International (KRY), Detour Gold [DGC/TO], Golden Star Resources (GSS), Western Goldfields (WGDF.OB), Aurizon Mines (AZK), IAMGOLD (IAG), Kinross Gold (KGC), International Minerals (IMZLF.PK), Agnico-Eagle Mines (AEM), and Yamana Gold (AUY).

Comments

[KBowen7736:]

What kind of crack is this person smoking? $700 gold for 2010? What part of the structural US deficit does she see decreasing over the next three years? Maybe she is a covert agent for the Goldman crowd!

2008 Jan 15 12:29 PM