It’s been quite the year for gold bugs. The metal’s rise, more than 50% so far, has made even the most hard-bitten traders reach for their calculators.
JP Morgan now thinks this is no flash in the pan. In a new report, the bank lifts its long-term gold price forecast by almost 80% to $3,850 an ounce, arguing that a new monetary “paradigm” is emerging as investors search for something sturdier than government paper.
For London-listed miners, that’s a welcome tailwind. Fresnillo PLC (LSE:FRES), the Mexican precious metals producer that still calls the FTSE 100 home, is one of JP Morgan’s top picks.
The bank reckons its strong balance sheet and scope to return more cash to shareholders should make the shares shine again.
Endeavour Mining PLC (LSE:EDV, TSX:EDV, OTCQX:EDVMF), too, earns an “overweight” tag with a £50 price target. After a tough spell for African operators, JP Morgan expects its cash flow and cost discipline to deliver a re-rating.
Gold may be an old asset, but in a world of uncertain currencies and ballooning debt, it’s back to feeling like the new money.