Gold, miners get Wall St. attentionJP Morgan technician sees...

Gold, miners get Wall St. attention
JP Morgan technician sees $430 an ounce possible

By Thom Calandra, CBS.MarketWatch.com
Last Update: 8:58 AM ET Jan. 15, 2003







SAN FRANCISCO (CBS.MW) - Wall Street is starting to upgrade its opinions of gold and gold miners, a forlorn group that is trying to shake off years of torpor.



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UBS Warburg says it expects gold to average $353 an ounce in 2003 and $356 and ounce in 2004. While the price levels are very near the current spot price for the metal, they represent a 10 percent and greater revision from previous forecasts from the investment bank.

UBS had expected the 2003 gold price to average $320 an ounce and $333 for next year. The bank also upgraded its opinions and price targets of several gold companies, including Goldcorp (GG: news, chart, profile) and Freeport McMoRan Copper & Gold (FCX: news, chart, profile). The bank sees a "favorable supply-demand balance, a weaker U.S. dollar and continuing geopolitical uncertainty " helping the metal, UBS said in a report Wednesday.

The price of the metal in recent weeks has ranged from about $350 an ounce to $357 an ounce. Professionals regard the so-called resistance level for the gold price at $356 or so. Gold's spot price rose about 25 percent in 2002.

Analyst John Reade at UBS in London said in his report that the volatility of the gold price is making his job of forecasting "harder than usual." Reade said if the dollar, which declined 16 percent in 2002 against the euro, were to "fall sharply" during a period of Middle East or Korea tension, gold's price could reach $400 an ounce. "The rally in gold that began in 2001 ... has been considerably assisted by the weakening of the U.S. dollar," he said in his report.

Early January traditionally is the time of year when mining and bullion analysts revise their forecasts for the metal. In 2002, one analyst, Andy Smith of Mitsui Global in London, came extremely close to pegging the high point for gold. He forecast a 2002 high of $355 an ounce, a level the metal reached Dec. 19.

Smith is still developing his 2003 forecast, he said from London this week.

In other Wall Street developments, a JP Morgan quantitative analyst said gold, flirting with six-year highs, most likely reached a bottom when it hit $254 an ounce in February 2001. The technician, Jordan Kotick, said the metal could approach $430 an ounce in coming years.

The price of the metal holding "above the monthly trend channel upper limit at $348 suggests that the market is consolidating its breakout," Kotick said. "These factors give increased credence to arguments that the market has in fact made a double bottom pattern at $252/$254. Such a pattern would project a rally to $430 in

coming years."

Kotick said the metal's price had contracted its daily range to $3 swings from $7 swings in price. "In the short term, the range contraction -- from $7 to $3 -- over the last few days portends a breakout in coming days/weeks," the JP Morgan analyst said.

Deutsche Bank also increased its price estimate for 2003, saying the metal would average $340 an ounce this year, a 6 percent rise from its earlier forecast. The bank noted political turmoil in the Middle East and North Korea as contributing to a probable flight to gold.



Finally, Fidelity, the mutual fund giant, reported it had boosted its stake in Kinross Gold Corp. (KGC: news, chart, profile) to just shy of 15 percent. Fidelity said its various units added 415,000 shares to its stake of 61.6 million shares and warrants, according to a news release.

On the individual companies, UBS Warburg raised its opinion of Goldcorp to "buy" from "neutral." Goldcorp, which accumulates bullion in its treasury, said its bullion holdings increased 17,000 ounces in the fourth quarter to 196,000 ounces. UBS raised its price target for the Canadian company to $15 a share from $14. The shares on the New York Stock Exchange Wednesday sold for $12 each.

UBS also raised its opinion of Freepoert McMoRan to "buy" from neutral and its price target to $21 a share from $17. The equity forecasts came from analyst Brian MacArthur.

In other news, Wheaton River Minerals (WHT: news, chart, profile) said it will become Canada's eighth-largest gold miner when it completes two purchases it announced Wednesday. The company, which mines gold, silver and copper in Mexico, said it signed letters of intent to purchase a gold and copper mine in Argentina and a gold mine in Australia. Wheaton said it expects the purchases to increase its proven and probable gold reserves, a measure of a miner's assets, to more than 3.3 million gold ounces from 800,000 ounces.

The spot gold price Wednesday morning dipped below $350, then rebounded to $351 an ounce by 10 a.m. ET.

Bullion proponents to gather

Gold-silver fund managers, analysts and mining executives will gather for their next major conference in Vancouver, British Columbia. The late January gathering, the Vancouver Investment Conference, will feature several gold mining analysts and newsletter editors whose hit rates on promising exploration companies were outstanding in 2002, among them Brent Cook, a geologist for Global Resource Investments, and Robert Bishop, longtime editor of Gold Mining Stock Report. See: Canada Gold Show.