According to Jefferies they have been bearish on gold minining stocks for a long time. And despite declines ranging from 30 to 56% this year,there is a further downside to go.
They have also are lowering the price target for gold to US$ 1,250 from 1,500, and downgraded and reduced the price targets for the Gold Majors: ABX to US$ 14 from 15.25; GG to US$ 19 from 25.47
KGC US$ 3.75 from 5.10 and NEM from US$ 18 to 30.18.
And they sound very bearish for the Gold Major Companies,as the price of gold declines further, gold will fall below the cost of production for these companies, resulting in years of negative cash flow.
"In conclusion, while we’d like to believe the carnage in the group is over, we don’t. With short reserve lives, rising costs, rising political risks and a stagnant commodity price, we believe an argument could be made that gold equities should trade at valuation discounts to other resource equities. Instead, they continue to garner valuation premiums. In our opinion, that continues to make the risk/reward for the North American gold group unattractive".
Source: BusinessInsider
Source: BusinessInsider
