It hasn’t been the autumn gold bugs were hoping for, but Canaccord Genuity released a revised outlook on precious metals today that should help keep their spirits up. It substantially raised its long-term gold forecast to $1,500 (U.S.) an ounce - a $400 boost.
“We believe that macro-economic conditions continue to favour higher gold prices, including record global liquidity, inflation prospects, low real interest rates, unresolved European sovereign debt issues and global currency debasement,” analyst Steven Butler said in a research note.
But one factor in particular has him feeling bullish: the record high liquidity levels in the U.S. dollar. Global U.S. dollar liquidity, which his research demonstrates has an “almost perfect” correlation to gold, sits at $10.4-trillion and is still rising.
Mr. Butler’s long-term forecast for $1,500 an ounce of gold starts in 2014. Previously, he was forecasting $1,100 in 2017 and beyond.
He still sees gold peaking at $1,750, but tempered his outlook for the peak price for silver, now forecasting it to reach $40 instead of $45 due to a weaker economic outlook.
Canaccord’s revised view of the commodities resulted in several changes to its outlook on equities. They are:
Timmins Gold Corp. : Downgraded to “sell” from “hold,” with the price target cut by 40 cents (Canadian) to $2.20. In addition to the revised gold and silver outlook, the action was tied to low gold recoveries and the possibility the company may require new debt or equity.
Goldgroup Mining Inc.’s price target was raised by 20 cents to $3.
Alexco Resource Corp.’s price target was cut by $2.50 to $9.75.
Bear Creek Mining Corp.’s price target was cut by $1.50 to $7.
Canaco Resources Inc.’s price target was cut by $1.50 to $6.
East Asia Minerals Corp.’s price target was reduced to $1.75 from $2.80.
Exeter Resource Corp.’s price target was cut to $9.35 from $11.50.
Fortuna Silver Mines Inc.’s price target was cut to $8.25 from $9.
Golden Minerals Co.’s price target was cut to $22.75 from $23.50.
MAG Silver Corp.’s price target was cut to $16.75 from $18.50.
North Country Gold Corp.’s price target was cut to $2.20 from $2.70.
Sandstorm Gold Ltd.’s price target was cut to $1.70 from $1.90
SilverCrest Mines Inc.’s price target was cut to $3.15 from $4.
Though price targets were cut on the above equities, he still rates most as speculative buys.
Raymond James Ltd. analyst Ben Cherniavsky is urging long-term investors to load up on Ritchie Bros. Auctioneers Inc. stock, as it has fallen 40 per cent since May to 52-week lows. Ritchie has been hurt by overall poor market sentiment and other factors, but Mr. Cherniavsky believes “Ritchie’s strong fundamentals, combined with some recent strategic changes, will reignite earnings growth over the next few years.” He also expects free cash flow to accelerate, which may trigger a substantial dividend hike.
Upside: Mr. Cherniavsky has a $27 (U.S.) price target and rates the stock as an “outperform.”
Baytex Energy Corp. is a lower-risk stock that is a good defensive energy holding in volatile markets while still providing excellent exposure to rising oil prices, says RBC Dominion Securities Inc. analyst Mark Friesen. “We believe that management has built a sustainable growth and dividend yielding company that is robust at oil prices well below current levels, with spending and dividends fortified by an active hedging policy,” he said.
Upside: Mr. Friesen rates the stock as an “outperform” with a $55 price target.
CIBC World Markets Inc. analyst Todd Coupland recommends investors buy Celestica Inc. ahead of the company’s third-quarter results on Thursday. He thinks the company will offer surprisingly upbeat guidance for the fourth quarter, given that Jabil Circuit Inc. issued a strong outlook last month and RIM’s new products should help bolster demand for the electronic manufacturing services company.
Upside: Mr. Coupland rates Celestica as a “sector outperfomer” with a price target of $13 (U.S.).
GuestLogix Inc. reported weaker-than-expected third-quarter results and said deployment of its OnTouch concierge service for airline passengers has been slower than anticipated. “Although we are disappointed, we believe that the shares are currently trading at a discount to the base business,” said Canaccord Genuity analyst Eyal Ofir.
Downside: Mr. Ofir cut his price target by 30 cents to $1.20 but maintained a “buy” rating.