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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: orkrious who wrote (81534)	5/7/2007 11:45:50 AM
From: orkrious	Read Replies (2) \| Respond to of 110194

from GS this am: Gold a derivative play on bullish oil outlook We believe a major derivative beneficiary of our bullish crude oil and gasoline price outlook—what we now refer to as super-spike “phase 2”—could be gold-leveraged equities. Gold prices have typically been most strongly correlated with oil during major bull market phases, but have lagged this cycle owing to subdued inflation fears. With oil inventories falling, spare capacity limited, and demand strong, we believe oil and gasoline price risk is again skewed to the upside. We see a corresponding upside risk to our gold price forecasts, in particular if investors at any point fear a return of inflation. Similar to the oil refiners, our 2008 EPS estimates for gold equities are some 50% above consensus and we see meaningful upside to reach our target prices. Our top picks for super spike “phase 2” now include Valero Energy, Marathon Oil, and Barrick Gold (all Buy).