It is no secret that 2016 has been a phenomenal year for gold. In fact, the first half enjoyed the best gain dating back to 1980. Investors and speculators generally understand that no market has gone up forever, and that even the strongest bull markets experience corrections for myriad reasons.

This is an interesting time for gold, and Credit Suisse has issued a report showing that there are now some tactical concerns about gold. The firm’s Andrew Garthwaite has a report in Credit Suisse’s Global Equity Strategy efforts. The reason here is that this concern is pointed at the gold stocks, now that many of them have rallied 200% or more.

The World Gold Council issued its first-half demand trends this week, explaining the key drivers for gold now. Garthwaite has some near-term tactical concerns on the price of gold — and particularly gold stocks.

Credit Suisse sees gold at $1,475 an ounce during the fourth quarter of 2016 and $1,500 during the first part of 2017. Does it seem odd that a firm with continued gold upside is worried about the gold stocks? Actually, Credit Suisse still have several gold stocks it wants its clients to own, ones with Outperform ratings and upside price targets.

Garthwaite’s report points out several key issues, including that gold is now marginally overvalued on the firm’s model:

Gold moves inversely with the real bond yield. Near term we think that real rates will rise, but longer term – with fiscal QE – they will stay low (albeit this depends on the degree of monetization of fiscal spending). … Gold moves inversely with banks and is a play on the financial/monetary system failing. We believe financials will outperform if bond yields rise. … Physical gold looks a little expensive relative to other precious metals, real assets (equities, housing) …

Garthwaite’s main concern about the gold stocks is that they have been unusually overbought relative to the gold price. The firm’s analysts believe that the gold stocks are now discounting a gold price of about $1,500. Also, some of the lower quality gold companies actually have outperformed high quality over the past year.

Of the 22 gold mining stocks covered by Credit Suisse, only 10 have Outperform ratings. The rest have Neutral or Underperform ratings. These are the five large cap gold stocks in which Credit Suisse still sees well above average upside.

Barrick Gold

Credit Suisse rates Barrick Gold Corp. (NYSE: ABX) as Outperform with a $27 price target. This gold giant has a $25.3 billion market cap, based on its current $21.74 share price, and Credit Suisse is far higher than the consensus analyst price target of $23.50. The firm recently pointed out that Barrick is well positioned to reach the upper half of guidance, and that it will deliver cost reductions and achieve $2 billion in net debt reductions.

Newmont Mining

In the second half of July, Credit Suisse raised its price target on Newmont Mining Corp. (NYSE: NEM) to $51 from $49. The firm has an Outperform rating on the stock. The share price was $45.43 at last look, and the consensus analyst target price is $46.86. Newmont has a $24.4 billion market cap. Its earnings report in July showed it expects to beat production and cost expectations. Credit Suisse said that Newmont’s project pipeline progress is better than expected and the firm has it as a top pick due to operational consistency, attractive relative valuation and strong track record of adding to its net asset value.

Yamana Gold

Yamana Gold Inc. (NYSE: AUY) also has an Outperform rating and its current share price of $5.68 compares to a consensus analyst target price of $6.25. Credit Suisse’s last report was from July 29, and the target price is $6.50. Yamana may have a low share price, but its market cap is still $5.4 billion. The firm said at the time:

We rate Yamana as Outperform due to its above average gold price leverage and our positive gold price outlook, potential balance sheet deleveraging and associated re-rating, potential for portfolio optimization and exploration potential at Malartic and Chapada.

Agnico-Eagle Mines

Though it is sometimes overlooked by U.S. investors, Agnico-Eagle Mines Ltd. (NYSE: AEM) has a $13.1 billion market cap at its $59.40 share price. Credit Suisse has an Outperform rating and a $69 price target, which is way above the consensus analyst price target of $58.16. The firm’s investment thesis from July said:

Agnico-Eagle Mines is a top pick for its strong exploration and project pipeline, strongest growth profile amongst the senior gold producers over the next five years, operational consistency and strong balance sheet. Agnico-Eagle Mines is one of the few companies we cover that has added to its net asset value per share over the past 12 months. Agnico-Eagle Mines’ pipeline includes near-mine opportunities at assets in Nunavut, Quebec, Finland and Mexico that have the opportunity to improve its production profile at relatively low capital intensity.

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Alamos Gold

Credit Suisse also rates Alamos Gold Inc. (NYSE: AGI) at Outperform, and the $9.20 share price generates a market cap of $2.4 billion. Credit Suisse’s price target is $10.75, while the consensus target is $10.21. The firm’s report was less than 48 hours old after Alamos Gold’s earnings report. It sees production light but costs in line with expectations, and it sees improvements in the second half. The reality is that the Alamos earnings report was not as strong as some analysts would have liked to see, but Credit Suisse remains positive and has an above-average price target.

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