This Canadian Stock Could Be the Best Market Hedge Right Now

Here’s why I think Barrick Gold (TSX:ABX) could be one of the best market hedges investors worried about uncertainty should consider.

Chris MacDonald

Chris MacDonald has had a love for finance his whole life, ultimately leading him to pursue an MBA in finance. He's worked as a financial analyst for a number of companies in the corporate finance and venture capital space during his 10-year investing career. He endeavors to follow in the footsteps of iconic investors like Warren Buffett in building a long-term defensive portfolio.

Published April 13, 2023 9:30 am EDT

With rising interest rates and an economic recession on the horizon, it is very common for the stock market to experience price volatility. Thus, investors should look for stocks that can act as a hedge against massive price movements. One Canadian stock which can fulfill this requirement is Barrick Gold (TSX: ABX).

Find out the reasons why.

Barrick has been making big moves

As per reports dated April 3, 2023, Barrick Gold has entered an agreement with the Government of Papua New Guinea, New Porgera Limited, and Barrick Niugini Limited to restart operations in the Porgera gold mine.

It is said to have approximately 10 million ounces worth of mineral deposits, along with 3.4 million ounces of inferred resources. Additionally, after the Wangima pit becomes ready for operations, it is expected to have an average annual production capacity of 700,000 ounces.

According to the agreement, Barrick Niugini Ltd. will get 47% of the profits, while the rest will go to the other stakeholders like the Enga Provincial Government and local landowners. The gold exploration company also plans to hire locals for its mining activities. Furthermore, it will also avail goods and services from businesses based in Porgera.

Buyback program in full flight

Data released on February 15, 2023, states that Barrick Gold has completed the repurchase of 24.25 million shares under its share-buyback program. By doing so, it returned US$1.6 billion worth of cash via various schemes and dividends to its shareholders. This is a massive increase from the US$1.4 million distribution that took place in 2021.

Barrick’s chief financial officer Graham Shuttleworth stated that the corporation’s dividend and share-buyback policies are a result of its powerful operating performance.

Insiders are buying

According to a report published on March 13, 2023, several insiders have been purchasing Barrick Gold shares. One of the biggest transactions in the last 12 months was by the corporation’s president, Dennis Bristow. He bought stock worth $4.4 million at the price of $21.97 for each share.

Moreover, during the aforementioned period, other insiders contributed to transactions worth $23 million, involving 1.09 million shares. All these insider purchases indicate the trust that these individuals have on their company when it comes to the organization’s potential growth. This also reflects their optimistic attitude about the company’s future plans.

Bottom line

Owing to the company’s buyback program and the huge investment by the corporation’s president, Barrick Gold has strong potential for growth in the long term. Thus, I think Barrick Gold could be among the best Canadian value stocks for investors seeking a market hedge right now.