Precious metals update - Gold
What's causing the gold price weakness? Morgans Senior Analyst James Wilson explains and reveals his top picks in the gold space:
- Gold prices have weakened due to a number of factors: potential QE easing, central bank possible sales, weak macro, ETF outflows
- Upside support will come from: Central bank opportunistic buying, seasonal demand, no end to QE, ETF inflows
- Historical gold PE's currently disconnected from long term average of 1.3x p/NPV - NCM currently trading at 0.72x p/NPV
- All-in cash costs will be critical for the producers moving forward: RRL (~$700) and BDR (~$600) have the lowest all-in costs for producers >120koz production
- The market is yet to reward gold companies for their hedged gold production. We anticipate these companies will perform better than those exposed entirely to spot - Beadell Resources (BDR) has 40% of production hedged for three years at US$1600. Regis Resources (RRL) has 195koz production hedged at between $1450 and $1540/oz. Both have low industry costs and strong margins
Clients can login and view our latest Gold Sector research report, alternatively call your Morgans adviser for more information.
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