The TSX rallied this week with some of its biggest positive moves in history. Many stocks rallied in line with it — stocks like Scotiabank and Barrick Gold (TSX:ABX)(NYSE:GOLD). But the difference between these stocks lies elsewhere. Today, we will take a look at why Canadian investors should own the gold miner instead of the banker.
For one thing, Barrick is positive by 17% year on year. Scotiabank, however, has lost 30% of its value since this time last year. That’s an incredible state of affairs to be in. But the fact that the gold producer is the safer investment in the current economic climate should surprise nobody. Gold prices are up at 2008 levels, after all.
Franco-Nevada is also positive year on year, up 20% since March 2019. And Shopify, arguably Canada’s best tech stock, has risen 21.7%. The online sales platform stock has been buoyed by Canadian investors buying names with social distancing built in.
Insider buying is a strong indicator of confidence
The reason we’re watching Barrick in this article, though, is insider confidence. Insiders have been buying shares in Barrick recently. This suggests that those in the know believe its share price will rise. That’s a fairly straightforward assumption in the current economic climate. But seeing Barrick’s inner circle snapping up shares is certainly encouraging.
Safety is the order of the day. But how do Canadian investors cope with a swathe of economic destruction of indefinite duration? Looking to safe TSX dividend stocks with inside buying could be a smart move.
Barrick is a solid gold buy this week for two reasons. First, it’s seen recent insider buying, which is always a positive sign. Second, Barrick has a solid safety plan in place. This company has taken the threat of COVID-19 and rolled out a comprehensive response plan. The company has restricted access and increased sanitation at each of its mines. Barrick has also upped sanitation measures across all its offices.
Gold is a long-term buy for Canadian investors
If you’re looking for a second miner to add to that gold portfolio, consider Yamana Gold. This top name is solidly diversified across Canada, Brazil, Chile and Argentina. The company has been stripping back assets, making for a healthier balance sheet. It has also brought in its own COVID-19 response plan. This includes partially standing down its workforce. Yamana has also seen strong recent insider buying.
We’re not out of the woods yet. Never mind the rallies and keep buying gold producers. S&P history shows that of rallies that topped 8%, 65% were mid-bear market. Statistically, then, rallies don’t necessarily equate to recovery. These kinds of movements should not indicate to investors that the market crash is over. The takeaway? Canadian investors should get invested in gold.
The bottom line
Barrick is are a great defensive dividend stock to buy and hold right now. If Canadian investors already hold this name, they should rest easy. If not, this is a key stock with recent insider buying to snap up on weakness. Buy the dips, go long, and hold through the potential recession.
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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 Victoria Hetherington has no position in any of the stocks mentioned. Tom Gardner owns shares of Shopify. The Motley Fool owns shares of and recommends Shopify and Shopify. The Motley Fool recommends BANK OF NOVA SCOTIA.