Bullish views on the gold market keep on coming, with Raymond James Ltd. of Vancouver the latest to upgrade its bullion assumptions for the next several years.
Citing increasing financial and economic uncertainty and heightened geo-political tensions, the investment house says it's more confident than ever that a new base price has been put in place and that the strong gold market will continue well past 2011. "Our view is well supported by positive supply/demand fundamentals, lack of confidence in paper currencies and policy makers and concerns regarding future inflation," Raymond James analysts said in a note.
Raymond James hiked its long-term gold price assumption to $1,100 an ounce from $1,000. For next year, it now expects the gold price to average $1,425 (up from $1,300) and in both 2012 and 2013 it sees the price averaging $1,450. Even in 2014, it sees the price leveling off only to $1,350. "This price deck better reflects our view that QE2 (the Fed's second quantitative easing move) is only the beginning and the fear of future inflation will continue to drive investment demand higher and for longer," it said in a note.
Upside: Raymond James made a slew of price target upgrades to equities in the sector to reflect its more positive view.
Its top gold picks are Aura Minerals Inc. , forecasting a six- to 12-month return of 115 per cent; Eldorado Gold Corp. (with a projected 55 per cent return), Great Basin GoldT Ltd. (46 per cent return); Kiska Metals Corp. (64 per cent) and Lake Shore Gold Corp. (37 per cent return).
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Hana Mining Ltd. reported a more than 40 per cent increase in contained copper and silver resources at its Ghanzi project in Botswana, based on a new independent estimate, noted Raymond James Ltd. analyst Tom Meyer. There's lots of potential for further exploration success and the scale of the project is doable for Hana to develop, said Mr. Meyer.
Upside: Mr. Meyer hiked his six- to 12-month target price by $1 to $6 but reduced his rating to "outperform" from "strong buy" because of the company's recent strong price performance.
Talisman Energy Inc.'s decision to sell a 50 per cent stake of its Farrell Creek assets to Sasol Ltd. of South Africa for $1.05-billion will be positive for the Canadian producer, said Raymond James Ltd. analyst Kafi Khouri. The transaction values the assets at a higher price than Mr. Khouri's earlier calculations and demonstrates the confidence Sasol has in partnering with Talisman for future projects.
Upside: Mr. Khouri hiked his six- to 12-month target on Talisman by $3 to $25.
Read more: Talisman gets partner in B.C. shale gas play
Black Diamond Group Ltd. has won a long-term rental agreement to house workers at Suncor Energy Inc.'s Firebag construction project. The award suggests Black Diamond may secure additional oil sands awards in coming months, said CIBC World Markets Inc. analyst Jeff Fetterly.
Upside: Mr. Fetterly hiked his price target by $1.50 to $24 and raised his rating to "sector outperformer" from "sector performer."
Abraxas Petroleum Corp. should benefit from an improving balance sheet and growing exposure to an oil-weighted production base, said Canaccord Genuity analyst Derrick Whitfield. "We continue to believe there is significant value embedded in the company's oil plays that will be unlocked over the next year through the successful execution of its first wells in the Bakken, Eagle Ford, Niobrara and Pekisko projects," he said.
Upside: Mr. Whitfield hiked his target price by 25 cents to $4.75.
Westshore Terminals Income Fund , which plans to convert to a corporation on Jan. 1, expects its total coal throughput next year to exceed 2010 levels of 24.6 million tonnes. Last week, it also announced a distribution that was above market expectations, noted TD Newcrest analyst Greg Barnes.
Upside: Mr. Barnes hiked his 12-month target price by $3 to $21.