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London
March 2, 2024
PI Global Investments
Precious Metals

After raising its gold price projections, RBC reveals its top picks in the precious metals sector


Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow

The precious metals analytics team at RBC Capital Markets remain bullish on gold,

“We have increased our near-term gold price assumptions. RBC Global Mining Equities now incorporates gold price assumptions of $2,020 per ounce in 2024 (3 per cent vs. prior) and $2,140 per ounce in 2025 (up 8 per cent vs. prior) … The net impact of these changes, plus revised base metals pricing, has resulted in our median NAV changing by 4 per cent and our median producer CFPS [cash flow per share] over 2024-25 changing by 8 per cent … We forecast moderate upside for gold in 2024 but note a positive skew in potential outcomes. In 2023, gold prices closed at $2,063/oz (up 13 per cent year-over-year), while average prices increased for an 8 th consecutive year to $1,943/oz (up 8 percent year-over-year). These trends were the product of high central bank gold purchases, despite low investment demand in response to monetary policy headwinds. In 2024, we see the potential for investment demand to re-emerge, supported by a relaxing of monetary policy, a rising likelihood of an economic slowdown, and higher political risk uncertainties arising from US elections and widening Middle East tensions … . At current spot gold prices of $2,023/oz, we calculate FCF/EV [free cash flow to enterprise value] for gold equities of 3.9 per cent in 2024 (or 5.0 perf cent for North American senior producers) vs. the S&P500′s 4.1 per cent — we view valuations as fair today but potentially attractive at higher gold prices. Our top picks include Agnico Eagle, De Grey Mining, Gold Fields, Hochschild Mining, Northern Star, Pan American Silver, Royal Gold, and Torex Gold’

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Morgan Stanley’s daily research summary features a prediction for a ‘banner year’ for cybersecurity stocks,

“MS Research Analyst Hamza Fodderwala highlights that 2024 is shaping up to be a banner year for Cybersecurity. Hamza’s bullish view is predicated on: 1) a historically elevated threat environment, as ransomware attacks were up more than 70 per cent last year, as hackers are starting to create malware faster than ever before with new GenAI tools; 2) regulatory tailwinds, as the recently enacted SEC requirements for stricter public company disclosures may be the most consequential security-related policy measure in history, in Hamza’s view; 3) early innings on GenAi product cycle – with rising threats and a significant labor shortage, Hamza thinks GenAI could help automate and transform security operations, greatly improving speed and efficiency for threat detection; and 4) 4) easier growth comps throughout the year, which should drive more durable topline growth as demand improves. Hamza notes that valuations are slightly above the historical average, but improving demand and profitability should drive further outperformance. Hamza is still favoring consolidators – riding the ‘Three Horsemen’ of Cybersecurity: PANW (OW [overweight], $375 PT), FTNT (OW, $77 PT), and CRWD (OW, $304 PT). However, opportunities in SMID-Cap security screen more attractive to Hamza: OW TENB ($60 PT) and VRNS ($55 PT) are his most favored names here”

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BMO chief economist Doug Porter highlights a domestic economy that has ‘stalled out’,

“While we’re on the subject of how the economy has fared with the pandemic (mostly) in the rear-view mirror… in the four years to November, real Canadian GDP has risen at a 1.26-per-cent annualized pace. In comparison, the four-year trend up to late 2019 was about a full percentage point faster at around 2.3%. And, the 10-year average growth rate leading up to the lockdowns was a similar 2.4 per cent. So, yes, the economy recovered relatively quickly. But that rebound has since stalled out, with Canadian GDP rising just 0.5% in the past nine months. And yet we still have a lingering inflation issue, suggesting growth can’t really pick up much from here (until supply strengthens). On balance, the takeaway is that the economy really did take a lasting hit from the pandemic, and the persistent softness in some of the hardest hit sectors explains a part of the reason why. PS: The U.S. also saw 2.4-per-cent average growth in the 10 years before COVID. In the past four years, GDP has risen at just over a 1.9-per-cent annualized pace. The U.S. has thus also seen a growth dent, but less deep—albeit with massive fiscal support”

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Diversion: “Winners of the 2023 close-up photographer of the year” – The Atlantic



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