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Globe editors have posted this research report with permission of Dundee Capital Markets. This should not be construed as an endorsement of the report's recommendations. For more on The Globe's disclaimers please read here. The following is excerpted from the report:

We remain positively biased on the long term prospects for gold prices. Our rationale is predicated upon a continuation of loose monetary policy and that demand for gold will remain strong from central banks and Asian markets. Key risks to our thesis include increasing real interest rates from policy tightening, a weak global economy, or the continuation of inventory sales due to interest in alternate investments or sales for liquidity purposes.

Ultimately, we expect gold producers to benefit longer term from higher gold prices, although financial stress near term remains high and valuation is uninspiring to attract broader investment. Following the XAU gold index's devastating 48-per-cent decrease in 2013, we are issuing a neutral outlook for the gold mining industry, an improvement from our prior cautious view.

We recommend investors maintain a bias to producers with better quality operations, balance sheet strength, and trade at a reasonable valuation. Our forecasts are generally more conservative than consensus estimates and we anticipate downward consensus revisions to continue as gold price estimates are cut and financial models adapt to reflect a more realistic value of uneconomic assets. Generally, we believe the senior gold producers represent a weak risk-reward proposal for investors, and we see better risk-adjusted opportunities via intermediate and junior gold producers, and better reward via quality, funded developers, or lower risk gold exposure via the metal. For our new coverage, our preferred senior producer is Kinross, due to the company's successful turnaround efforts, but still heavily discounted relative valuation. We forecast the company will generate fair levels of near term free cash flow, while production estimates incorporate negligible development risk from new operations. The Dundee gold team also continues to recommend B2Gold, New Gold, and Randgold as preferred producer picks.

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