In addition to raising their gold forecast from the German bank, they recommend investing in three companies in the sector.
Long-term investors have always looked at gold with delight, and have “glowed their eyeballs” lured by its brilliance. That’s why they have always been positive about gold. However, gold is already over its six-year high, and investors are late to join the rally. Not only in spot gold, but also in “gold” companies, with the sector already above its 52 – week high. Analysts say one thing is clear: we have an up-to-date gold rally and it’s time to build up positions in companies in the sector.
In the latest DB report, the company has raised its expected target for gold. In addition, it has rated three companies with a buy rating.
The report states:
- We have increased our forecasts for gold and silver over the next few months, expecting gold to reach $ 1,575 due to the macro environment and several factors that we consider to be the main driver of the rally: interest rates, expensive stocks, the US dollar and central bank purchases
- We have developed macro models that show that gold can even rise above $ 1,700 an ounce.
- For each of the companies we have an updated analysis based on the latest reports and conversations with the management of the companies
DB also recommends the following three stocks of companies in the gold sector.
One of the top companies in the industry, and their stock has broken the long-range. Barrick Gold and Randgold Resources closed their merger in January this year, with their union creating the largest company in the sector in terms of production, reserves and market capitalization. The company released much better Q2 reports earlier in the week. Reducing corporate debt is also a very strong indicator of a company’s well-being. Barrick Gold paid a small dividend within 0.88%. DB is targeting the shares to reach $ 20, last closing at $ 18.39.
Pan American Silver
Pan American is one of the largest silver companies in the world, with mines in Bolivia, Mexico and Peru. The company is also working on its Navidad Silver project in Argentina. The company also produces 500,000 ounces of gold each year from its gold mines in Canada and Peru, making the company a middle-class producer. Pan American also produce zinc, copper and lead. The company is paying a dividend of 0.88% and DB is forecasting the shares to reach $ 20. Lastly, they closed at $ 16.99.
Wheaton Precious Metals
This company is suitable for more conservative investors in this sector. Wheaton Precious Metals is a Canadian company, with 60% of the profits coming from the sale of silver and 40% from gold. The company has long-term contracts with mines to buy gold and silver, including from Goldcorp mines in Penasquito – Mexico, Vale – Salobo mines in Brazil, Sweden – Lundin Mining Znkgruvan and Glencore – Antamina and Yauliyacu in Peru. After buying the gold and silver, the company sells them on the spot market.
Last December, Wheaton Precious Metals announced that it had reached an agreement with Canada Revenue Agency on missed tax payments in 2005 and 2010. A solution to this problem will help increase the value of the stock. Shareholders receive a dividend of 1.35%. DB is forecast to reach $ 31.80 and closed at $ 26.66 yesterday.
Trader Martin Nikolov