Will the Gold Bull Get Going This Spring?

Gold prices have moved upward in the face of U.S.-China trade tensions. Barrick Gold Corp. (TSX:ABX)(NYSE:GOLD) and other gold stocks should benefit.

| More on:
Gold bullion on a chart

Image source: Getty Images.

When this year started, I’d argued that investors should keep gold in their portfolios. Central banks had seemingly capitulated on their rate-tightening paths in late 2018. This spurred a stock market run in the first quarter of 2019. The yellow metal managed to hold steady for much of the year before a dip in April.

The deterioration in trade talks between the United States and China has rattled markets. Back in March, it seemed a deal was near, but the sticking points that were apparent at the time have not been resolved. A prolonged trade war between the world’s two largest economies does not bode well for investor sentiment or for the global economy at large.

With that in mind, investors should consider a play for gold in mid-May. Let’s look at two gold equities that offer solid value right now.

Barrick Gold (TSX:ABX)(NYSE:GOLD)

Barrick Gold is the second-largest gold producer in the world. It has lost the top title recently, as there has been a scramble for consolidation in the industry. Shares of Barrick have dropped 9.9% in 2019 as of close on May 13. The stock is down 3.6% from the prior year.

The company reported a first-quarter profit, bolstered by its acquisition of Randgold Resources. Leadership expects a joint venture with Newmont to be completed at the end of the second quarter. Adjusted net earnings came in at $184 million, or $0.11 per share, compared to $170 million, or $0.15 per share, in the prior year.

Barrick saw gold production increase to 1.367 million ounces compared to 1.049 million in Q1 2018. However, gold prices were down year over year. Barrick is still working to integrate its acquisitions, but the gold giant is a worthy bet for those betting on a bull run in the spot price this year and beyond.

IAMGold (TSX:IMG)(NYSE:IAG)

IAMGold is a much smaller gold producer based in Toronto. Shares of IAMGold have plunged 33.7% in 2019 as of close on May 13. The stock has dropped 57% from the prior year.

The company released its first-quarter results on May 6. Gold production fell to 185,000 ounces in Q1 2019 compared to 229,000 ounces in the prior year. Revenues were driven down to $251 million over $314.5 million, and the company reported an adjusted net loss of $2.2 million. IAMGold reported lower sales volumes at several key mines. Lower gold prices also weighed on revenues and earnings.

IAMGold maintained its full-year guidance for 2019 in the face of a rough quarter. However, it did not state that these targets were at risk, and the company began cost and productivity initiatives to mitigate the risk of a downgrade. Gold production at its Westwood mine is expected to strengthen in the final three quarters of the year.

The stock is a reasonable value play for investors on the hunt for gold equities. Shares had an RSI of 30 as of close on May 13. The stock just re-emerged outside technically oversold territory.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Ambrose O'Callaghan has no position in any of the stocks mentioned.

More on Metals and Mining Stocks

silver metal
Metals and Mining Stocks

1 Reeling Silver Stock to Consider Today

Aya Gold & Silver (TSX:AYA) is a Montreal-based company that is engaged in the acquisition, exploration, evaluation, and development of …

Read more »

Woman has an idea
Metals and Mining Stocks

Want High Growth? 3 Under-$7 Stocks Could Climb 100%

The TSX extended its losing streak to five trading days on January 24, 2022. Canada’s main equities benchmark is now …

Read more »

TSX Today
Metals and Mining Stocks

TSX Today: What to Watch for in Stocks on Thursday, January 27

The stock market continued with high volatility on Wednesday, as expected on the day of key monetary policy announcements. While …

Read more »

gold stocks gold mining
Metals and Mining Stocks

3 Stocks to Buy as Gold Hit Fresh Highs

Gold has always been an attractive investment option during political and economic uncertainties. With growing concerns over multi-decade high inflation, …

Read more »

A miner down a mine shaft
Metals and Mining Stocks

Why This Mining TSX Stock Shot Up 15% Yesterday

Turquoise Hill (TSX:TRQ)(NYSE:TRQ) is a Montreal-based mining company. It owns a majority stake in a Mongolia-based copper and gold mine. …

Read more »

grow dividends
Metals and Mining Stocks

Why Did Turquoise Hill Stock Soar 18% on Tuesday?

Turquoise Hill Resources (TSX:TRQ)(NYSE:TRQ) shares climbed as high as 18% in early Tuesday trading. This came after news that a …

Read more »

stock research, analyze data
Metals and Mining Stocks

Forget Tesla (NASDAQ:TSLA): Buy This Lithium Stock Instead

Tesla (NASDAQ:TSLA) is dropping like a rock this year. Investor sentiment about tech companies with hyped-up valuations has clearly turned. …

Read more »

happy new year 2022
Metals and Mining Stocks

1 Canadian ETF to Help Your Portfolio Thrive in a Volatile 2022

The volatile start to 2022 may or may not be a sign of what to expect for the remainder of …

Read more »