Goldman Sachs is RAISING ITS 2008 GOLD FORECASTS factoring for a recession in the U.S. in both Q2 and Q3 2008, leading to a weaker U.S. Dollar target of $1.51/Euro (up from $1.35) over the next six months. The prior $800/ounce gold target is now put at an average of $915/ounce for all of 2008, with an exit 2008 commodity price of $850 (up from $825 prior). The call is based on support from investment demand, purchases from emerging market central banks, and the ongoing declining mine supplies.&n
bsp; Goldman Sachs is also raising its 2009 and 2010 gold prices:
- 2009 prices are now expected to be $870/ounce (up from $852);
- 2010 prices are now expected to be $940/ounce (up from $907);
Near-term Goldman Sachs notes a possibility of a spike past $1,000.00 that could be the effect of further credit events and increases in oil prices.
Below is a summary of some of the equity calls from Goldman Sachs on its gold stock sector coverage:
- Barrick Gold (NYSE: ABX) is Goldman Sachs’ TOP PICK as a defensive and non consumer-sensitive pick within its basic materials coverage. Its estimates were only raised 1 penny to $2.01 EPS this year but next year’s EPS is now targeted at $4.00 (up from $3.20 prior). This was recently also Jim Cramer’s top gold pick.
- Newmont Mining Corp. (NYSE: NEM) (neutral rated) estimates were raised from $1.31 EPS to $1.33 and next year from $1.94 to $2.76.
- The new estimates for AngloGold Ashanti Ltd. (NYSE: AU) (neutral rated) are $1.61 EPS from $1.57 for this year and $3.38 from $3.16 for next year.
- Compania de Minas Buenaventura SA (NYSE: BVN) ADR’s (sell rated) are seeing this year’s EPS estimates raised to $2.54 from $2.50 and next year’s EPS estimates raised to $4.43 from $3.55.
- Gold Fields Ltd. (NYSE: GFI) (Buy rated) estimates are being raised to $0.87 EPS from $0.69 this year and raised to $1.54 EPS from $1.39 next year.
- Freeport-McMoRan Copper & Gold (NYSE: FCX) (Buy rated) is seeing the estimate for this year down by 1 penny to $8.49, but the EPS estimate for next year is being raised to $10.03 from $9.75.
Traders can also look at the streetTRACKS Gold Shares (NYSE: GLD) as the ETN (ETF) in the sector. It trades at roughly one-tenth the price of gold bullion after trust expenses and fees.
Many traders thought that first $100 OIL super-spike price wasridiculous at the time, but then as prices soared and all of a suddenthe hiked and raised $135 OIL super-spike price didn’t get as muchcriticism. For inflation’s sake, let’s hope Goldman Sachs proprietarytraders don’t go out on a massive buying spree.
Jon C. Ogg
January 16, 2008
