RE:RE:RE:RE:BTO pays a 16 cent US DIVTD Securities' Global Rates Strategy Group is expecting the Fed to start cutting rates in May and to deliver 250bps of rate cuts by early-2025. We have increased our gold price deck by an average of 4.4%. We are now forecasting an average gold price of $2,100/oz in 2024 (from $2,000/oz), $1,950/oz in 2025 (from $1,850/oz), $1,850/oz in 2026 (from $1,800/oz), and $1,800/oz in 2027 (from $1,700/oz). We have increased our long-term gold price to $1,750/oz (from $1,700/oz), beginning in 2028 (Exhibit 2).
M&A expected to remain on the forefront. 2023 was a significant year for gold M&A, featuring Newmont's acquisition of Newcrest, Agnico and Pan American completing their acquisition of Yamana, B2Gold's acquisition of Sabina, and Calibre's recently announced acquisition of Marathon Gold, among others.
With a strong gold price, discounted multiples in the junior/developer segment, and strong balance sheets among the larger producers, we expect M&A to be a key theme in 2024, particularly on the asset-level as acquirers (i.e., Newmont and Pan American) look to divest assets and improve their capital positions.
Maintaining our OVERWEIGHT sector recommendation. Inflationary cost pressure appears to have eased, and we are expecting relatively flat overall cash costs in 2024 vs. 2023. A strong gold price and stable operating costs would result in increasing margins for producers, and we believe they are increasingly attractive compared with the royalty companies. Our ACTION LIST BUY pick remains B2Gold. Our top picks are Agnico-Eagle among the large caps and K92 among the mid-caps. For silvers, our top pick is MAG.