Leading Independent Investment Research, Morningstar, Inc.

Morningstar

Leading Independent Investment Research

Morningstar, Inc.

Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. We offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors. 

Morningstar provides data on more than 500,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 16 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries, with more than $180 billion in assets under advisement or management as of June 30, 2015. We have operations in 27 countries.

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Equity Bottom-Up

Fed rate hike worries have created an opportunity to buy gold miners at a discount. The market is rightly concerned about the impact of higher rates on investor demand for gold. But a narrow focus on investor demand overstates its importance to gold's long-term outlook.&nbsp;The next decade will see a profound shift in gold's nature: from a "financial" commodity to a "consumer" commodity. The massive investment flows into (and out of) gold in the past several years temporarily concealed this development, but going forward, consumer spending will be too great to mask any longer.&nbsp;Even in the face of weak investor demand, we forecast a 4.7% CAGR in total physical gold demand over the next five years, led by Chinese and Indian jewelry buyers. We expect jewelry to account for two thirds of gold demand by 2020, up from a 50% share in the past five years. We see the share of gold purchases by central banks and ETFs dwindling below 5%.&nbsp;Gold supply growth must accelerate, but mine projects in development would be insufficient to meet demand. To avert a shortfall, we estimate an additional 200 tonnes of annual mine supply would be required by 2020, equivalent to about 5% of global mine production.&nbsp;A prospective supply shortfall is bullish for gold prices, but significant mine cost deflation diminishes the upside. We forecast a gold price of $1,300 per ounce on a nominal basis by 2020, or roughly $1,160 in constant 2015 dollars.&nbsp;Gold miners are cheap. Equity market valuations appear to reflect expectations of sub-$1,000 real gold prices in the long run, well below our long-term forecast.&nbsp;Analysts: Kristoffer Inton, Daniel Rohr, CFA &amp; Mathew Hodge, CFA

Fed rate hike worries have created an opportunity to buy gold miners at a discount. The market is rightly concerned about the impact of higher rates on investor demand for gold. But a narrow focus on investor demand overstates its importance to gold's long-term outlook.&nbsp;The next decade will see a profound shift in gold's nature: from a "financial" commodity to a "consumer" commodity. The massive investment flows into (and out of) gold in the past several years temporarily concealed this development, but going forward, consumer spending will be too great to mask any longer.&nbsp;Even in the face of weak investor demand, we forecast a 4.7% CAGR in total physical gold demand over the next five years, led by Chinese and Indian jewelry buyers. We expect jewelry to account for two thirds of gold demand by 2020, up from a 50% share in the past five years. We see the share of gold purchases by central banks and ETFs dwindling below 5%.&nbsp;Gold supply growth must accelerate, but mine projects in development would be insufficient to meet demand. To avert a shortfall, we estimate an additional 200 tonnes of annual mine supply would be required by 2020, equivalent to about 5% of global mine production.&nbsp;A prospective supply shortfall is bullish for gold prices, but significant mine cost deflation diminishes the upside. We forecast a gold price of $1,300 per ounce on a nominal basis by 2020, or roughly $1,160 in constant 2015 dollars.&nbsp;Gold miners are cheap. Equity market valuations appear to reflect expectations of sub-$1,000 real gold prices in the long run, well below our long-term forecast.&nbsp;Analysts: Kristoffer Inton, Daniel Rohr, CFA &amp; Mathew Hodge, CFA

Rate-Hike Worries Create a Golden Opportunity in Mining Stocks

Newmont Mining

Rate-Hike Worries Create a Golden Opportunity in Mining Stocks