Long term gold and silver forecasts revised

National Bank Financial (NBF), the Canadian investment dealer, has increased its future gold forecasts.

The revised estimates remain unchanged for 2007, at $675/oz average price.

However, for 2008, the forecast has been increased from $675/oz to $725/oz; in 2009 from $625/oz to $700/oz.

Moving on to 2010 estimates have been adjusted upward from $575/0z to $650/oz, and for 2011 onward up from $525/oz to $600/oz.

NBF has also adjusted its silver price forecast to reflect a 50:1 ratio with the gold price.

The revisions reflect the likelihood of the US dollar remaining low against other currencies and the probability that inflation will increase, given that oil prices have recently exceeded $80 barrel.

The bank’s 2008 estimate for the gold price is based on currency being the main driver, although higher oil prices, lower real interest rates and continued strong base metals markets have also been taken into account.

NBF analysts expect a recovery of the US dollar in 2009-2010 and lower oil and overall commodity prices, as compared with levels in 2008.

The longer term forecast (2010-2011) reflects the level at which gold mining companies are basing their long-term mine plans, together with reserve/resource calculations.

With regard to the price of silver, the bank forecasts an average price of $13.50/oz for 2007; for 2008 the forecast has been increased from $13.50 to $14.50/oz; for 2009 increased from $12.50 to $14/oz; for 2010 increased from $11.50 to $13/oz.

Finally, the long term forecast for silver has been increased from $10.50/oz to $12/oz.