The year 2016 has turned out to be an unexpectedly strong bull market for the gold bugs. This may seem obvious now, but it just was not expected by most sources at the end of 2015. Now we have seen many of the world’s top gold miner and gold producer stocks rise 100%, 200% and even more. Many analysts were caught flat-footed by the major quantitative easing fueled gains for gold. Now Jefferies is raising both its gold forecast for 2014 and for some of the top stocks.

In the case of Barrick Gold Corp. (NYSE: ABX), Jefferies has became much more bullish than the rest of Wall Street firms covering the stock. One of the drivers is that Jefferies has raised its gold forecast to a near-term peak of $1,400 per ounce, and it has increased its longer-term forecast for gold to $1,300 from $1,200.

Driving this increased gold price is an ongoing elevated macro risk. Jefferies sees this as being very favorable for the likes of Barrick Gold, and the firm was also more positive on Randgold Resources Ltd. (NASDAQ: GOLD) and Kinross Gold Corp. (NYSE: KGC). The firm sees the environment having materially improved — and that is even with the possibility of gold prices remaining at or even modestly below the current level.

Barrick Gold is tied with London-listed Acacia as the firm’s top gold mining pick. Jefferies believes that the more leveraged miners, such as Barrick and Kinross, should obviously benefit most. The team said:

In the case of Barrick, the conversion of debt to equity via free cash flow is a clear positive, and this conversion will be accelerated at a gold price of at least $1,300/oz. In the case of Kinross, valuation based on our new gold price forecasts is inexpensive and more than offsets the associated risks (this was not the case assuming $1,200/oz gold). Randgold stands out amongst its UK peers with best in class liquidity, quality operations and a premium valuation we expect to persist as the gold price moves higher into 2H16… the outlook for these three gold mining equities has materially improved. Importantly, our Buy recommendations on Barrick and Randgold do not depend on gold continuing to rise for the long term. A flat price environment should be more than good enough for these shares to perform well.

Additional drivers for gold were investment demand and gold being an uncorrelated asset in diversified portfolios. The Jefferies team does acknowledge risks. They feel that gold share prices (gold stocks) will be volatile, but they are telling their clients to own these shares for the long run. The Jefferies report said:

We expect gold shares to be volatile as investor sentiment swings from risk-on to risk-off. But over a longer term horizon, we expect these shares to perform well, and we would buy them for the long run now. Barrick and Acacia are our top picks in global gold mining.

Barrick Gold saw its rating raised to Buy from Hold and its price target raised to $26 from $15 in that call. Barrick’s U.S.-listed shares closed at $21.08 prior to the call and were up nine cents at $21.17 afterward. That new $26 target is over $5.50 higher than the consensus analyst target of $20.46, and it is just $2 shy of the street-high $28 analyst price target. Barrick has a 52-week trading range of $5.91 to $23.47. It is one of the top miners in the world for gold, with a market cap of $24.5 billion.

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Randgold Resources trades as American depositary shares in New York, but the call was based on overseas trading. The call from 9,055p as the last trade in London to a higher target of 10,500p (from 6,000p). That implied 16% upside. Randgold’s ADSs closed at $120.30 the prior day and were down 1.2% at $118.90 on Thursday, versus a 52-week range of $54.88 to $126.55. Its market cap is $11 billion, and its consensus price target is $118.64.

Kinross Gold was raised to Hold from Underperform and its price target was raised to $6 from $4. The prior closing price was $5.40. Kinross shares were last seen up five cents at $5.45, in a 52-week range of $1.31 to $5.82, and its consensus price target is $6.02.

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