In a recent report, CIBC metals analysts Barry Cooper, Brian Quast and Cosmos Chin said, "We further expect pure gold plays will outperform gold/base metal mixed plays in the current environment especially since the latter has not suffered full adjustments to the lower pricing regime for copper and zinc."
Suggesting that recession "hollow" will last two years, the analysts forecast that gold will also show strength for those two years. "It is our contention that regardless of the economic conditions, it is the uncertainty factor that drives gold's appeal," they said. "That uncertainty factor we believe is at an all-time high and unlikely to dissipate in 2009."
CIBC's analysis found several catalysts that should help gold equities perform better in 2009, including:
- Not many alternatives
- Small-cap rebound in the works?
- Pure plays to outperform producers enhanced by base metals
- Costs down
- Reserves flat-good for gold less so for equities
- M&A to accelerate out of necessity
- Weightings for sector will force buying