NEW YORK (AP) A Sterne Agee analyst urged investors to pick up shares of certain gold mining companies, predicting that gold prices will continue rebounding and reach new highs within 18 months.
Gold for August delivery climbed $57.90, nearly 4 percent, to $1,622.10 per ounce on Friday, as the overall market tumbled. As the markets calmed on Monday, the price of gold edged down $5.30 to $1,616.80 per ounce by midday.
The price of gold had fallen about 9.3 percent, compared with the end of February, as the stock markets rose. Investors see gold as a safe investment and tend to sell it, pushing down its price, when other markets are stable or rising and stocks climb.
Analyst Michael Dudas said slowing growth in the U.S. economy, tepid job creation and other factors will combine to send gold prices to new highs over the next 12 to 18 months. He reiterated his target prices for gold: $1,800 per ounce this year and $2,000 per ounce in 2013.Dudas said precious metal equities are "underowned and underpriced" and pointed to Newmont Mining Corp., Coeur d'Alene Mines Corp. and Gold Resource Corp., all of which he rated at "Buy." He said those mining companies are likely to see their shares rise when gold prices start increasing. "Despite many precious metals equities enjoying one of the best price movements on Friday, we believe investors have yet to fully recognize the relative attractiveness of these shares given the sharp price correction seen since February 2012, above-average dividend yields and prospects of improved cash flow generation," Dudas wrote in a note to investors. Mining shares were mixed at midday: Newmont stock was flat at $50.30, while the overall markets were down roughly six-tenths of 1 percent; Coeur d'Alene fell 76 cents, or 4.1 percent, to $17.59; and
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
24/7 market commentary from Jim Cramer and 20+ veteran Wall Street gurus. Get access to the latest trading ideas on stocks, options, and ETFs as well as a real-time forum to see the pros exchanging their investment ideas.
- Jim Cramer + 20 Wall Street pros
- Intraday commentary & news
- Real-time trading forum
- Actionable trade ideas
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV