Not since the Cold War days has there been a militarization of Europe the like of what we’ve seen in Ukraine. That gradual buildup of Russian forces on Ukraine’s border finally escalated yesterday. As a result, market turmoil has ensued, causing some investors to question what comes next.
Unfortunately, that market turmoil isn’t going to be short term, nor will it be local. Markets across the world are already down. This adds to an already volatile mix caused by inflation levels not seen in four decades. Even some market darlings are down considerably.
Where then should investors turn to? Fortunately, not all stocks are subject to that same impact.
This stock is as good as gold
During times of volatility, gold stocks are almost always safe long-term options. In fact, gold’s status as a store of wealth is something that has endured over millennia. I realize that view may run contrary to crypto-bulls, but Bitcoin is down over 7% at the moment, but I digress.
So, where should investors turn to avoid that market turmoil? Let’s take a moment to talk about Barrick Gold (TSX: ABX)(NYSE: GOLD). Barrick is one of the largest precious metal miners on the planet. The company has over a dozen active mines on four continents.
As impressive as that portfolio sounds, there are several key points that prospective investors should note.
First, Barrick has excelled at reducing its debt over the past few years. At one point, the miner was straddled with well over US$10 billion in debt. As of the most recent quarter, Barrick has approximately $5.1 billion of debt. Factoring in Barrick’s cash war chest of just over $5.2 billion, you have Barrick sitting in a very good position without any net debt.
This means that the miner has overall lower costs and, more importantly, the financial muscle to expand where the opportunity arises.
Throw in the fact that Barrick is one of the most efficient miners on the market, and you have a cash-generating investment that should handily navigate any market turmoil.
Second, let’s not forget about gold prices. Gold is now trading up nearly 7% year to date, just over US$1,933 per ounce. Given Barrick’s impressive all-in sustaining cost (AISC) of US$971 per ounce during the quarter, the company remains in a good position.
In other words, with market turmoil increasing, Barrick is well armed to weather the volatility. The company even offers a juicy performance-based dividend, which currently works out to a yield of 1.75%.
Should you buy during market turmoil?
Barrick is a great long-term investment to buy during times of volatility. Not only will any further gold price hikes bolster Barrick’s bottom line, but they will also come back to investors in the form of that dividend.
In my opinion, Barrick is a great long-term holding that should be a part of any well-diversified portfolio.
