Goldman Sachs---GOLD---Strategy Overview
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Dateline: United States
U.S. Gold: With Record Speculative Longs, May Face Liquidation Pressure Near Term
We remain selective on gold and U.S. gold equities at current levels in the near term. Key reasons for
caution are
• Comex speculative positions at record high poses a liquidation risk. The latest
(Friday) disclosure shows a net 280t long position, up 73t from a week earlier.
• Recent U.S.−dollar relative strength vs. the euro is unhelpful. A weakening U.S. dollar is the key driver
for gold, while U.S.−dollar strength is a key risk.
• The stocks are close to 12−month highs. And valuations appear full at the current spot price of $364
per oz.
However, in our opinion, the macroeconomic environment remains supportive of gold stocks with a
12−month outlook. Our coverage view remains Neutral, and our ratings and estimates remain
unchanged.
In this trading context, the stocks most susceptible to profit taking may be those with whose valuations
are most sensitive to gold. According to our estimates, in order of decreasing sensitivity these are Gold
Fields Ltd. (ADR) (GFI) (U/N, $12.7) , Compania de Minas Buenaventura (ADS) (BVN) (IL/N, $36.81) ,
Newmont Mining Corp. (NEM) (OP/N, $37.54) , Barrick Gold Corp. (ABX) (IL/N, $19.28) , AngloGold
Ltd. (ADR) (AU) (IL/N, $36.5) , Placer Dome Inc. (PDG) (OP/N, $13.07) , and Freeport−McMoRan Copper
& Gold (FCX) (IL/N, $27.28) . |
