The story for gold is firming, and that is also for the gold miners. Sterne Agee’s metals and mining analysts have a report out on Thursday defending gold and the miners, on a day when gold is already soaring due to new European bank worries. The firm’s Michael Dudas and Satyadeep Jain are signaling that the bank policy, technicals and seasonal factors are supportive for gold (and silver).
Sterne Agee noted that it is finding that miners are aggressively restructuring their operations for a gold market in a $1,100 to $1,200 per ounce market. The belief here is that this should help provide added investor comfort and fuel for a valuation recovery among mining equities. Another boost is a stabilization in the exodus from gold exchange traded fund (ETF) demand.
The analysts also have shown their top picks with Buy ratings. Agnico Eagle Mines Ltd. (NYSE: AEM), Coeur Mining Inc. (NYSE: CDE) and Newmont Mining Corp. (NYSE: NEM) are the three well-known gold stocks in the call with Buy ratings. A lesser known, small cap named Gold Resource Corp (NYSEMKT: GORO) was also highlighted.
Agnico Eagle Mines saw its price target raised to $48 from $42 in the call, after closing at $40.39. The team said:
Visible continuity from the Federal Reserve Board regarding an elongated zero interest rate policy, a reversing trend in the value of the dollar and supportive investor interest should allow gold prices to move higher. Any added easing from the European Central Bank combined with economic and wealth-driven demand growth from China should aid price trends as well. We have entered a period that has historically provided seasonal support to gold and silver prices and mining equities.
Under technical analysis, we recently featured that the firm’s chief market technician, Carter Braxton Worth, suggested a current gold chart pattern that is extremely bullish — potentially back up to $1,500 per ounce!
Sterne Agee did outline the risks to its strategy in the call, but all in all this is yet another feather in the cap for gold bugs.