Gold shares held firm Friday amid broad-based liquidation on Wall Street, with the AMEX Gold Bugs Index (HUI) fractionally higher at 537.06 in mid-day trading.
Gold equities were the only sector of the U.S. markets in positive territory, following the very disappointing June nonfarm payrolls report. The sector was supported by the yellow metal, which climbed $11.01 to $1,543.46 per ounce. Gold bullion advanced on speculation that additional monetary and/or fiscal stimulus may be needed to fuel further economic growth, following two consecutive worse than expected jobs reports.
Last evening, Scotia Capital initiated coverage on 11 gold mining companies. In its report, the firm wrote that “The outlook for the gold market is encouraging. We are forecasting an average gold price of $1,500/oz for 2011, $1,600 for 2012-2013, $1,400/oz for 2014, $1,300/oz for 2015, $1,200/oz for 2016, and $1,100/oz thereafter.”
Scotia went on to say that “We believe that our gold price is supported by: gold as a currency, gold as an inflation hedge, gold as a ‘preferable’ asset class, and gold as portfolio diversification.”
The following is a list of the companies on which Scotia launched coverage – along with their ratings, 12-month target prices, and implied 1-year forecasted return based on current share prices:
Agnico-Eagle Mines (AEM) – Sector Perform, $8.50, 29%
Barrick Gold (ABX) – Sector Perform, $80.00, 28%
Eldorado Gold (EGO) – Sector Outperform, $21.50, 46%
Franco-Nevada (FNV.TSX) – Sector Perform, C$45.00, 20%
Goldcorp (GG) – Sector Outperform, $66.00, 37%
Gold Fields (GFI) – Sector Perform, $19.00, 31%
IAMGOLD (IAG) – Sector Outperform, $26.00, 38%
Kinross Gold (KGC) – Sector Perform, $20.00, 29%
Newmont Mining (NEM) – Sector Perform, $66.00, 23%
Randgold Resources (GOLD) – Sector Perform, $105.00, 26%
Royal Gold (RGLD) – Sector Perform, $72.00, 23%
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