BMO’s Andrew Kaip: The Gold Majors Are Back

The Gold Report: You recently became managing director of mining equity research at BMO Capital Markets. What kind of overview of the gold and silver sectors does this position entail?

Andrew Kaip: Taking one of the lead roles at BMO Research has given me the opportunity to step away from the day to day of covering stocks. Supervising a team of analysts allows me to spend more time thinking about where we are in the gold and silver cycles and the implications for investors. That’s precisely what we did when we launched coverage on the senior gold producers.

TGR: So where is gold in its current cycle?

“Asanko Gold Inc. is one of the opportunities in what we call predevelopment names.”

AK: At BMO, we’ve kind of stuck our neck out after some deliberate thought, and we’re suggesting a lot of similarities between 2001 and 2015. The price of gold was low then, just as it is now. Similarly, the gold producers of 2015 have come to resemble those of 2001, in that they have finally, after a long struggle, stabilized their operations such that they can contend with low prices. They have shut down unprofitable mines and lowered costs at those that they have kept.

I believe that gold producers are now in the early stage of a new cycle.

TGR: What are your 2015 and 2016 forecasts for the price of gold?

AK: Quite flat. We forecast a 2015 average price of $1,200 per ounce ($1,200/oz) and an average of $1,180/oz for 2016. Beyond that, we expect a slow and gradual rebound to about $1,250/oz long term.

TGR: And your forecasts for silver?

AK: Very much the same story. We forecast a year-end 2015 price of $16.43/oz, $16/oz for 2016 and $17/oz for 2017. We expect …read more

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