CIBC World Markets says it is maintaining its forecast of $950/oz gold this year and $1050/oz for 2010.
In a recent analysis, CIBC metals analysts Barry Cooper, Cosmos Chiu and Brain Quest declared, Strength in gold is coming from investment demand that is unprecedented.
They suggested that gold ETF demand is offsetting any fabrication slumps that are occurring due to decreased discretionary spending on luxury goods.
CIBC estimated than more than 70 million ounces of new gold resources were added to portfolios last year at an average cost of $110/oz, based on both acquisition and exploration.
Kinross in our opinion takes top honor in adding total ounces per share whereas Centerra has an unsuccessful outing losing ounces in excess of its depletion rate, the analysts said. On pure exploration success, we think that Agnico-Eagle did the best at finding ounces at a rate of $12.50 each.
In their analysis, CIBC reviewed a collection of mature minds from the past five years and found that the cost of keeping the lights on has increased more than 75%. While open pit operations appeared to be topping out at $120 to $130/oz for year, underground mines continue to see sustaining cost creep of about $20/oz/year and now sit at $160/oz.
Barrick has both the highest and lowest capex mines, according to CIBc's study.
As of March 16, CIBC upgraded Barrick and Pan American Silver to Sector Outperformer, while El Dorado fell from Sector Outperformer to Sector Performer. Kinross remains our top pick overall.
CIBC also favors Yamana, Goldcorp, Franco Nevada and Silver Wheaton for a combination of value, growth and safety.While noting that prices for precious metals stocks have not kept pace with the earnings power offered by the $100/oz gold prices, CIBC, nevertheless, forecast earnings increases of 46% against share prices that are only up 16% from the fourth-quarter 2008 average, implying improving results may not be priced in.