The Globe and Mail reports in its Wednesday, May 4, edition that the precious metals sector is approaching "fair value," according to Canaccord Genuity analyst Tony Lesiak, who believes a further rise in gold prices is necessary to facilitate "further material share performance in the current bull phase of the rally." The Globe's David Leeder writes in the Eye On Equities column that in updating his forward curve pricing assumptions and a subsequent 20-per-cent increase in his target price for the sector's stocks, Mr. Lesiak points to a 27-per-cent rise in the Amex Gold BUGS Index (HUI), which tracks the world's biggest gold producers, since April 7. That increase has come alongside a 6-per-cent increase in the price of gold and 17-per-cent jump in silver. He says in a note, "Thus far in 2016, we have seen the HUI increase 127 per cent off the low in mid-January, a seven-times leverage to the underlying price of gold." He says, "The intensity of the current upswing can be partly explained by the extreme low valuation starting point." Mr. Lesiak downgraded Kinross Gold ($6.88), Barrick Gold ($23.33) and Alamos Gold ($8.91) to "hold" from "buy," citing "limited implied return to target."
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