| CIBC WORLD MARKETS INC. |
| Precious Metals |
| Barry Cooper |
| Debt Drives Demand For Precious Metals As Currencies Devalue |
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- The supply of money is beating out the supply of gold, driving prices higher. This trend will likely continue amongst several major countries of the world for the foreseeable future. Those regions where the dilemma is less pronounced will likely purchase gold to insulate themselves from trouble.
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- We are raising our metals forecast to $1,225, $1,600 and 1,700/oz. for gold and $20, $28 and $30/oz. for silver for 2010, 2011 and 2012 respectively. Although we have not changed our long-term gold price forecast of $1,200/oz. we have increased it for silver to $20/oz from $15/oz.
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- Our top picks include KGI, OSK, EGO, PAAS, CGA, AGI, FRG, ARZ, SMF, ORE and IAG. Our bias is towards smaller names which represent combinations of growth, value and burgeoning production from new sources. For investors seeking less risk, we recommend ABX for higher liquidity.
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- We have tempered our view on trading multiples, expecting compression to continue as commodity prices rise. The relationship for gold price movements has been 0.5 to 1 point drop in CF multiples for every $100/oz increase in bullion. Silver relationships however are more complex.
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Here's the link to the 109 page CIBC tome of fundamentalation once again, just in case. It's a very good report, this one.