Gold Stocks Slow to Track Bullion Higher

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...The equities are starting to reflect the price of the commodity," said Tony Lesiak, mining analyst at UBS Securities Canada Inc. "The valuations are stretched."

As gold prices continued their march toward $1,000 (U.S.) an ounce yesterday, market watchers said the rally in the precious metal could still have legs for months to come. But the jury is out on whether gold equities can keep up the pace...

"We're not even close [to a top for gold prices]," said precious metals fund manager Charles Oliver of Sprott Asset Management, who said that based on historical prices relative to oil, gold could be headed for the neighbourhood of $1,700 an ounce. "[Investors] haven't missed the boat."...

National Bank Financial assistant market strategist Pierre Lapointe, whose firm last month raised its target for gold to $1,500 from $900, noted that unlike many other commodities, gold is still nowhere near a record high on an inflation-adjusted basis. That would be more like $2,200, he said.

But while many analysts think the $1,000 mark will fall, opinions are split as to whether the record price run translates into an opportunity for investing in gold equities. While analysts don't feel gold stocks are fully reflecting current price levels, they believe stocks are no longer bargains, as investors have increasingly embraced the high-price environment as the norm.

"The equities are starting to reflect the price of the commodity," said Tony Lesiak, mining analyst at UBS Securities Canada Inc. "The valuations are stretched."

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