MENU

Fool Canada’s first 1,000%+ winner?

Our Chief Investment Advisor, Iain Butler, and a team of The Motley Fool’s most talented investors from across the globe recently embarked on an unprecedented mission:

To identify the 20 Canadian small-cap companies they believe have the best shot at earning investors like you gains of 1,000%+ over the coming years.

For the next few days only, you can get the names and full details on these 20 potential “10-baggers” when you join Iain and his team in a first-of-its-kind project they have dubbed Discovery Canada 2017.

Gold Prices Are Rising! Is it Time to Invest in Gold Stocks?

Gold prices are up.

The precious metal is nearing the US$1,300 mark, which gold bugs and pundits last year signaled would occur sometime this year. For Barrick Gold Corp. (TSX:ABX)(NYSE:ABX) the steady gain in gold prices could signal a repeat of the rally last year that resulted in a handful of gold stocks surging over 150% at one point.

Here’s why this latest surge makes Barrick a great investment option for your portfolio.

The multi-year drop in gold was what the precious metals sector needed

Back in 2011, gold prices were approaching US$1,900 per ounce. Gold producers like Barrick were making huge profits, and little regard was made to making operations more efficient or reining in costs. That all changed when the price of gold finally stopped rising and began a multi-year decline.

Over the next few years, gold steadily declined, hitting sub-US$1,100 per ounce. Producers were left with huge amounts of debt and an expensive, inefficient process. Barrick had a massive US$13 billion in debt, far exceeding the cap of the company itself.

Left with few other options, Barrick embarked on an aggressive turnaround plan that was focused on reducing costs, slashing debt, and becoming more efficient in operations. Higher-producing facilities were given priority over others, and the company set aggressive debt-reduction targets for each fiscal year that were to be met through cost-cutting, asset sales, and other efficiencies.

Not only did Barrick meet those targets, but the company became the most efficient producer in the market. Barrick leads peers in maintaining all-in sustaining costs just over US$700 per ounce level — a significant improvement over the +US$1,000 level this figure was back in 2011.

Barrick has slashed over US$5 billion of debt in the past two years, and management has spoken about the possibility of the company being completely debt free within the next decade. By the end of the next fiscal year, Barrick is targeting to have just US$5 billion in debt left.

In some ways, the lean years following the price drop of 2011 were exactly the catalyst that gold producers needed to prepare for an eventual gold market recovery.

The gold market recovery

When gold prices finally started to rise, Barrick was in a much better position. With lower-cost operations and significantly less debt, the increased gold price added straight onto Barrick’s margins.

This has made the stock shoot upwards by over 150% in the past year.

Recent events have started to signal another rally on gold may be beginning. Between the posturing of North Korea, upcoming elections in France, and the ongoing Brexit negotiations, there’s plenty of uncertainty in the market now, which leads traditional investors back to the perceived safety of gold investments.

Gold experts have said that the price of gold could hit US$1,400 per ounce this year, which would be hugely beneficial to Barrick’s bottom line, helping the company generate free cash.

Should you add Barrick to your portfolio?

Experts consider Barrick to be one of the most efficient, if not the most efficient, gold producers on the market. Between Barrick’s shrinking debt and improving financials, the company makes a compelling case for investors looking to diversify with a gold stock, or for those who believe gold prices will continue to appreciate.

36-Year Old CEO Bets Over $300 Million on 1 Stock

Iain Butler, Lead Adviser of Stock Advisor Canada, recommended this little tech darling to thousands of loyal members last March... and those that followed his advice are up 127.7% (they've already made 2X their money!).

Not to mention this tiny Eastern Ontario company has already been recommended by both Motley Fool co-founders, David and Tom Gardner, because of its amazing similarity to an "early stage" Amazon.

Find out why Tom Gardner was recently on BNN's Money Talk raving about this company, and how you can read all about it inside Stock Advisor Canada. Click here to unlock all the details about his Canadian rule breaker!

 

Fool contributor Demetris Afxentiou has no position in any stocks mentioned.

NEW! This Stock Could Be Like Buying Amazon In 1997

For only the 5th time in over 14 years, Motley Fool co-founder David Gardner just issued a Buy Recommendation on this recent Canadian IPO.

Stock Advisor Canada’s Chief Investment Adviser, Iain Butler, also recommended this company back in March – and it’s already up a whopping 57%!

Enter your email address below to find out how you can claim your copy of this brand new report, “Breakthrough IPO Receives Rare Endorsement.”

I consent to receiving information from The Motley Fool via email, direct mail, and occasional special offer phone calls. I understand I can unsubscribe from these updates at any time. Please read the Privacy Statement and Terms of Service for more information.