Avoid Dodos and Find Gold and Silver Miners that Can Soar

The Gold Report: A recent Raymond James research report refers to silver as the "devil's metal" What is the story there?

Chris Thompson: Silver is much more volatile than gold. Typically when we see a weak day for the gold price, silver has a terrible day. Likewise, if we see a strong day for gold, typically silver delivers exceptional performance. Because it's so volatile, we term it the devil's metal.

TGR: If the selloff in precious metal equities is over and this is the bottom, how long do you expect the flat-lining to persist?

CT: At Raymond James, in the near term we see gold trading rangebound between $1,200 per ounce ($1,200/oz) and $1,300/oz and silver trading rangebound between $16.50/oz and $18.50/oz. We are not seeing fundamentals that would prompt a price outside of those respective ranges. We expect current price strength to continue to the end of Q1/15, followed by some weakness into the summer and then more strength toward the end of the year.

TGR: In a recent research report you warned investors about 2015 possibly being the "Year of the Dodo" for certain precious metal producers. Please explain. Continue reading "Avoid Dodos and Find Gold and Silver Miners that Can Soar"

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Potential Oil Glut! Raymond James Analyst's Contrarian Forecast

The Energy Report: Why are you expecting an oil glut in 2014?

Andrew Coleman: Because of the evolution of North American shale oil plays, we are on track to add about 3 million barrels (3 MMbbl) of new supply over the next five years. Yet we know oil demand has been falling across the developed nations and is still weak coming out of the global financial crisis. Those developments point toward a glut.

TER: Saudi Arabia surprised you last year by cutting production when oil was more than $110 per barrel ($110/bbl). Why would Saudi or other suppliers not do that again?

AC: What hurt production outside the U.S. last year and helped keep the demand side a little more in balance was that Saudi cut 800,000 barrels a day (800 Mbbl/d) in Q4/12, sanctions in Iran reduced exports by about 800 Mbbl/d as well, conflict in Sudan took 300 Mbbl/d offline and the North Sea average was lower by about 130 Mbbl/d. These reductions kept last year's supply more balanced than we thought it would be. Going forward, Saudi's ability or willingness to cut is certainly going to be tested, because by our model the country may need to cut 1.5 million barrels a day (1.5 MMbbl/d), about double what it cut last year. It would have to do that for a longer period of time, given the amount of excess storage that could show up on the global markets.

TER: But, as you just pointed out, Saudi Arabia's cut came in the context of actions by other players. The other players are going to be as unpredictable as they were last year, aren't they? Continue reading "Potential Oil Glut! Raymond James Analyst's Contrarian Forecast"

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