Latest research updates released after the annual report;The...

Latest research updates released after the annual report;
The forecast PE’s were calculated using a sp of 2.79 for GS and 2.72 for the other two so at the current lower sp the PE’s will be slightly lower.

GS forecast a PE of 5.4 this year dropping to 3.8 and 3.1 for the following two years and div yield of 5.6% rising to 7.6 and then 9.6%. They assume POG of 1262, 1151 and 1200 for 2014-16
Their POG assumptions are well below spot and yet those forecast PE’s are extremely attractive as are the forecast yields.

Citi has a forecast PE ratio of 8 for 2014 falling to 6 and then 4.7. That seems way too high for 2014 considering 2013 PE was 9.3 and they are ramping up strongly but is partly explained by their assumed average gold price of just $1150 for 2014. They assume POG of 1195 and 1315 for 2015-16.

Morgan Stanley has a PE ratio of 4.6 for 2014 falling to 3.7 and then 3.2. They assume POG of 1288, 1319 and 1288 for 2014-16.

So on the broker forecasts, this stock appears strongly undervalued at very low gold price assumptions. If the POG holds up or continues to trend up and the average begins to look like it will be much higher than the broker assumptions for the rest of this year and they change their assumptions to reflect it (as they so often do), then those forecast PE’s will end up being even lower.

EVN yesterday announced a hedge to support large capex at one of its mines.
The hedge starts at A$1566 for Dec this year and then gradually climbs over regular 3 month intervals to A$1641 by 2016. Chances are most of the hedge will not accurately predict the POG at those times but it is interesting to see the market is factoring in gradually improving gold prices right through the period. Actual market contracts speak much louder than broker predictions.

I also respect the opinions of guys like Faber more than I do the broker assumptions on POG.
http://www.hardassetsinvestor.com/interviews/5119-marc-faber-gold-will-hit-new-record-high-even-though-markets-manipulated-by-fed.html?showall=&fullart=1&start=2

"the facts are that the U.S. government debt took 200 years to reach $1 trillion in 1980; we were at $5 trillion in 2000, and we’re now around $17 trillion. You can clearly see where the trend is.
And the deficit will actually start to increase shortly a) because of the increase in interest rates; and b) because more and more people are retiring, so the entitlement programs will increase. I do not see the debt in the U.S. diminishing. The question is, Will it increase by $1 trillion annually or $2 trillion; who knows?"
"Looking at the fundamentals, looking at how debt will continue to increase and how central banks will continue their monetization not only in the U.S. but on a worldwide scale, I assume the price of gold will trend higher. Most likely we’ve seen the lows below $1,200.
HAI: Will gold revisit its highs?
Faber: Eventually we will be over $1,921. The question is, Will it be this year or in five years? That I don’t know."