The corridors of Bay Street are abuzz with gold fever, and it’s not just the usual market speculators taking notice. CIBC Capital Markets has just made a bold move by upgrading price targets for 36 gold mining stocks—a significant vote of confidence in the precious metal’s trajectory.
As I pored over CIBC’s latest investor note yesterday, what stood out wasn’t just their prediction that gold would reach new all-time highs in 2025, but the breadth of their conviction across the sector. The bank raised its long-term gold price forecast to US$2,200 per ounce for 2024, US$2,300 for 2025, and a stable US$1,800 from 2026 onward.
“We’re not just seeing typical safe-haven buying,” explained Anita Soni, CIBC’s Managing Director and veteran gold equity analyst. “The fundamental drivers have shifted. Central bank purchasing remains robust, and we’re witnessing a paradigm shift in institutional investor sentiment.”
This isn’t merely technical market movement. Gold prices have already surged nearly 16% this year, recently touching the US$2,400 mark before settling around US$2,340. For context, that’s roughly US$300 higher than where gold traded at the beginning of 2024.
The implications for Canadian miners are substantial. Among the 36 companies receiving upgrades, standouts include Agnico Eagle Mines, which saw its price target boosted to C$122 from C$116, and Barrick Gold, with a new target of C$35 up from C$33. Mid-tier producers weren’t left behind—B2Gold‘s target increased to C$6 from C$5.65, while Lundin Gold‘s rose to C$24 from C$22.50.
What’s driving this golden optimism? CIBC points to multiple factors converging at once.
First, central banks globally have been on a gold-buying spree. Data from the World Gold Council shows central banks added 1,037 tonnes of gold to their reserves in 2023—the second highest annual total on record. This trend has continued into 2024, with first-quarter purchases reaching 290 tonnes.
“Central banks in emerging markets, particularly China, are diversifying away from dollar-denominated assets,” notes John Reade, Chief Market Strategist at the World Gold Council. “It’s both a portfolio diversification strategy and a hedge against geopolitical uncertainty.”
Second, the expectation of interest rate cuts by the Federal Reserve later this year has bolstered the case for gold. Traditionally, gold benefits when real interest rates decline, as its opportunity cost—the fact it yields no interest—becomes less significant.
The third driver is something I’ve been tracking closely: the rise in geopolitical tensions. From ongoing conflicts in Ukraine and the Middle East to escalating trade disputes between major economies, uncertainty has investors seeking stability.
But not everyone shares CIBC’s enthusiasm. When I spoke with Marc Chandler, Managing Director at Bannockburn Global Forex, he offered a more tempered view: “Gold’s current price already reflects considerable optimism. The market may be getting ahead of itself regarding Fed rate cuts, which could create vulnerability.”
This caution isn’t unwarranted. Gold has historically been volatile, and its price movements often confound even seasoned analysts. Just last December, few predicted the metal would be trading above US$2,300 by spring.
For Canadian investors, the implications extend beyond just the mining sector. A sustained gold rally could boost the Canadian dollar, as the country ranks as the world’s fifth-largest gold producer. It could also attract increased foreign investment into Canadian mining operations, many of which are now seeing improved margins at current gold prices.
“At these price levels, projects that weren’t economically viable at US$1,800 gold suddenly look attractive,” explains Michael Siperco, a mining analyst at TD Securities. “We’re likely to see increased exploration and development activity across the sector.”
For the average investor, CIBC’s upgrades present both opportunity and challenge. The gold mining sector is notoriously cyclical, and timing entries and exits can be difficult. The safest approach might be gradual position building in quality producers with strong balance sheets and disciplined management.
Looking at specific companies, CIBC singles out several “top picks” that they believe offer the best risk-adjusted returns. Beyond the major producers, they highlight Calibre Mining, which saw one of the largest percentage increases in target price (to C$2.65 from C$2.30), and Wesdome Gold Mines (to C$13.50 from C$12).
What’s particularly interesting is how CIBC adjusts its valuation methodology across different types of gold companies. For producers, they use a 50/50 blend of 1.0x price-to-net asset value (P/NAV) and 6.0x enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA). For developers and explorers, they rely more heavily on P/NAV metrics with various risk adjustments.
From my perspective, having covered commodity cycles for nearly two decades, this gold rally has some distinguishing characteristics from previous upswings. The combination of persistent inflation concerns, monetary policy shifts, and changing reserve currency dynamics suggests this isn’t just a typical flight to safety.
As economic data continues to evolve and central banks navigate the delicate balance between fighting inflation and supporting growth, gold’s path may remain volatile. But CIBC’s comprehensive sector upgrade suggests they see something more fundamental at play—a structural shift that could support higher gold prices for years to come.
For investors weighing exposure to the sector, the message seems clear: gold’s shine might last longer than many expect. But as with any commodity play, selectivity and patience remain virtues as valuable as the metal itself.
