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Bank of America lifts gold forecast by 10pc to $US2200 an ounce
As the peak for interest rates comes into view, Bank of America is forecasting that the price of gold will rise to $US2200 an ounce in the fourth quarter. It previously had gold at $US2000 in the December quarter.
Bank of America previously said it expected gold to rally this year, “driven by a view that central banks have no silver bullet in bringing inflation under control (e.g. energy prices or supply chain disruptions cannot be directly influenced by monetary authorities).
“A re-acceleration of China’s economy should push aluminium and copper up into year-end,” BofA said. Bloomberg
“This remains our core view and we see scope for gold to move higher once the end of the hiking cycle is reached.”
BofA said gold’s move on the banking crisis proved fleeting because Credit Suisse’s collapse came after near two decades of struggle and “the problems with regional US banks were heavily influenced by a lack of oversight”.
“As such, while we acknowledge the recent issues, they are not indicative of a wider banking crisis, in our view.”
the gnome
Hi Goldgnome,
Thanks for sharing. Well if that happened CEY would be clearing $800-900 over AISC. Even our share price would have to react to that!
Best wishes,
Prof
Prof---as you seem to have the figures to hand, assuming for now that gold hovers around $2,000, how will the end of the waste clearance affect the AISC and profits? I think the waste removal is costing rather a lot at the moment? A $50 or £100 dollar reduction in AISC is as good as the same increase in the POG isnt it?
Also, moving forward, (just at a guess) how much will connecting to the grid cut costs?
Thanks
Prof
I would not discount gold going to $2100 or $2200
The belief in curency is a belief in government, and that belief has all but disappeared.
good luck to us all
The gnome
Hi Paul,
I am afraid that I have limited figures to hand. The guidance for AISC for this FY is $1250-1400. Q1 AISC was $1348 for a production of 105,875oz so already well below the top end of the guidance range. All else being equal AISC will fall as oz produced increases as the non marginal costs of production are spread over a larger volume of ozs. That should therefore drive AISC down over the rest of the year. All else however is not equal and I expect a number of the other initiatives that CEY has underway to drive down AISC to have some effect this year (you mention the grid connection although of little/ limited impact this FY I suspect) and also some of the one off costs as they seek to get the mine back in shape to cease or reduce (you mention waste removal which we should see the 'extraordinary' element slip away although some is business as usual. As such I would be disappointed to see AISC above the mid-point of the range and would hope to see it somewhere between the bottom end of $1,250 and the midpoint of $1,325.
A large part of this guesstimate and perhaps too much is hope. I do suspect that CEY have given a range that they are comfortable being able to deliver even with bad inflation and a few curve balls as Horgan does seem to like to play it safe (fine by me!). If that inflation is not as bad as last year and there are no serious curve balls then that also gives me an expectation that we could come in within the figures I mention above of $1250-$1325.
Ultimately however we will only know in retrospect.
Best wishes,
Prof
Hi Goldgnome,
I thought it was bed time down under!
I would love to see those figures. Put the $2200 together with a slight over performance on the AISC range that I mention in my previous post and we would be getting $1000 an oz over costs. Now wouldn't that be nice.
Yours dreaming,
Prof
It doesn't work like this alas Paul- there are many factors including sentiment (which is less rationale)- 6th Jan2023 (3.5months ago, CEY was 125.5 and gold was 18,866)... But gold rose from 1,629 to 1,866 in only 2months(CEY rose 40% and other PMs flew too) as it looked like inflation had topped and dropped.
Since then (CEY has dropped about 18%), despite gold increasing from 1,866 to where we are now (so another ~120), but it took almost twice as long as previous rise with about half the increase and did drop quite a bit before rising again in this timeframe. during this time, the feeling is that inflation drop has/is stalling... hawkish FED etc.
My point is, absolute values don't matter, if they did (and RNS were good), then CEY would be above 125.5, and not down about 18%.
Long term remains strong though- let's hope inflation drops quick, which it should do soon, then CEY will reflect this (without any poor RNS on company stuff)
Thanks Prof. No matter what the figures are or what happens, somebody with the benefit of hindsight will say that it was expected because of XYZ . I suppose it is very hard to predict how much gold you will get out of the ground, even working at the same speed, as it depends wheter the gold is there or not! A few nice fat nuggets along the way would help :-)
I know some people dont like Martin Horgans "playing it safe" style, but that is also fine by me as I think he realises that he has to produce what has been predicted , or very close to it, each quarter, to maintain confidence. So this "steady as she goes" style is fine so long as the work is getting done.
Having said that, Im still waiting for him to unleash a cover drive or 2. From what I can gather he does seem to be clearing the way and opening things up to allow increased production in the not too distant future.
Fingers crossed for the Golden flip flops.