16-Feb-05
07:43 Gold is a buying opportunity on limited future dollar strength -- Goldman
Goldman Sachs sees a buying opportunity in gold based on GS Economists' view that further dollar strength may be limited, and its 12mth forecast for the dollar to weaken by 5% and 7% vs Asian and European currencies, respectively. The second reason, spec gold positions on the COMEX are currently at a 28mth low, at 119 tonnes net long, down from its Nov high of 550 tonnes. The firm sees this as a level from which gold has rallied to successively higher prices 3 times over the past 2 years. The firm recommends buying Barrick Gold (ABX) today on their expectation of modest yoy reserve growth and above cons EPS est. The firm also likes Newmont Mining (NEM) but recommends waiting until after the co reports 4Q04 next week on expected higher costs guidance. All gold companies are experiencing cost pressures related to currency, higher royalty charges, high oil, steel, and consumables prices and ongoing wage inflation