By Cory
Big Bank Outlooks For The Precious Metals in 2018
This synopsis of big bank and investment firms outlooks for gold next year comes from a Bloomberg post from earlier this week. The initial part of the post was on Bitcoin so I will leave that part out.
Here are the comments…
And for 2018, analysts are expecting gold and silver prices to repeat New Year’s rally trends, with positive returns most likely to come in the first quarter. In fact, the NYSE Arca Gold Miners Index (GDM) saw its best performance on average during the months of January and February, while September and October had the worst performance.
Bloomberg seasonality chart for gold miners ETF shows it pays off to trade precious metals stocks early in the year.
Source: Bloomberg
Goldman Sachs
The “January effect” is well known in the equity market for its strong seasonal patterns that are observed in many energy and agriculture commodities.
Bank’s analysis showed positive returns in first quarters in precious metals prices, particularly in platinum and palladium and some base metals.
The rally in precious metals likely due to strong jewelry demand coming from China during the Chinese New Year and a pick-up in auto production (ex-China) after the holiday-related December slump.
Goldman, however, sees a negative six percent return from precious metals in 2018, mainly due to lower gold price estimate and expects prices to reach $1,200 per ounce by mid-2018. Silver to follow gold lower over the next six-months. However, after that time period, the metal should rise, and even outperform gold as high global growth should finally translate into greater industrial use of silver.
Canadian Imperial Bank of Commerce
The bank recommends playing “the seasonal trade” by buying gold or silver stocks in December and selling in February. The strategy has high probability of success, based on historical trend, but also comes with risks that could stem from changes to the U.S. Fed’s outlook in economy, stronger U.S. dollars and geopolitical uncertainty.
CIBC recommends that a gold-weighted portfolio’s core holding should include Agnico-Eagle Mines Ltd., Franco-Nevada Corp., Kinross Gold Corp. and Newmont Mining Corp. among large-cap miners. B2Gold Corp., Detour Gold Corp. and SSR Mining Inc. among mid-tiers, while Pretium Resources Inc. and Continental Gold Inc. are preferred among smaller-cap mining stocks. Also recommends Pan American Silver Corp. and Wheaton Precious Metals Corp. for silver exposure.
Investors who seek to add some “torque” to their gold/silver exposure can consider adding more leveraged stocks such as Barrick Gold Corp., Gold Fields Ltd., Goldcorp Inc., Kinross Gold Corp., Yamana Gold Inc., Detour Gold Corp., Iamgold Corp. and Coeur Mining Inc.
Toronto-Dominion Bank
The bank is expecting a repeat of New Year’s rally, which has materialized in the past four years. This rally mostly starts in late December and lasts well into the new year, with the GDX exchange-traded fund, which captures large-cap gold miners, up at least 34% each year.
The recent decline in gold miners’ share prices, where selloffs have been enhanced by tax-loss selling for some stocks, potentially sets the group up for another rally in January, next …read more
Source:: The Korelin Economics Report
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