Blackmont Capital is raising its long-term forecast for both gold and silver to reflect the bullish sentiment for each metal. Gold moves to $950 from $850 per ounce and silver climbs to $14.50 from $14.00 per ounce.
Analyst Richard Gray told clients: "The primary driver for a higher gold price continues to be a further weakening of the U.S. dollar while inflationary concerns, geopolitical tensions, and the metal's status as a safe haven are also expected to play a part."
His silver price forecast is based on a gold:silver price ratio of 65:1, which is a compromise between the 53:1 average witnessed in the first eight months of 2008 and the 76:1 seen in the turbulent final four months of the year.
"The gold:silver ratio increased dramatically as the state of the economy worsened in September 2008," Mr. Gray said. He expects silver will rise in the second half of 2009 as the gold price moves higher, the gold:silver ratio contracts, and liquidity creeps back into the market.
Blackmont also modified its cost estimates for 2009 and beyond to reflect lower exchange rates in gold producing countries, declining fuel prices and the softening of other industry costs as the lower recession-driven demand begins to trickle down to price contraction for the miners.