Leverage to Gold Price Should Benefit Companies
Source: Seeking Alpha††(1/15/08)
Wellington West has hiked its annual gold price forecast for the next few years and beyond by $100 per ounce. The firmís target for 2008 is now $800. It is $775 for 2009, $750 for 2010 and $700 for the long-term. The move reflects a weaker-than-expected U.S. dollar.
In terms of production however, analyst Catherine Gignac said there is a limited supply of new gold. And while several deposits could be developed in the next three to five years, ďnon-operating pressures and more thorough evaluation tends to prolong the timeline,Ē she said.
Companies with leverage to the gold price should benefit, but a weak U.S. economic outlook will hit all equities and cause volatility, she told clients in a note.