Raymond James Hikes Targets for Gold and Silver, Related Stocks

Includes: AEM, AUY, EGO, GG, GLD, MDG, SLV
by: FP Trading Desk

The surging popularity of commodity-backed exchange-traded funds in recent years has completely changed the way investors, analysts and other market players make decisions.

One of the reasons behind Raymond James’ decision to raise its 2008 long-term price target for gold to $650 (2008 forecast) is the fact that the StreetTRACKS Gold Trust (NYSEARCA:GLD) has continued to add gold-backed ounces.

The total amount of gold in the StreetTRACKS trust is 15.67 million ounces, worth roughly US$10.7-billion.

This buying has occurred both when gold experiences a sell-off and as it pokes through $680 per ounce, analyst Paul O’Brien said in a research note, adding that such elevated price levels have only been reached five times in history.

Mr. O’Brien also notes the impact of oil prices, which have been driven up by the late winter in eastern North America, “sending inflationary ‘fears’ into a frenzy.”

He has also hiked his 2008 price forecast for silver from $10.00 per ounce to $11.00, while keeping targets unchanged for other metals.

However, given these elevated expectations for gold and silver, Mr. O’Brien has adjusted his price targets for related equities significantly.

Agnico-Eagle Mines Ltd. (NYSE:AEM) is now expected to climb to $57 from a previous target of $54 and Eldorado Gold Corp. (NYSE:EGO) moves to $8 from $6.75.

Mr. O’Brien also hiked his forecast for Goldcorp (NYSE:GG) shares to C$43 from C$37, Meridian Gold Inc. (MDG) to C$42 from C$36.10, and Yamana Gold Inc. (NYSE:AUY) to C$23 from C$17.75.