Barrick Gold Shines: How to Capitalize on the Precious Metals Market

As gold prices continue to rise, should investors consider one of the world’s largest gold miners? Or is Barrick stock (TSX:ABX) a hold for now?

| More on:
gold stocks gold mining

Image source: Getty Images

Gold prices continue to climb after hitting lows last September, proving once again a great place to store cash can be in gold prices. However, an even better place is in the gold companies themselves.

With the S&P/TSX Global Gold Index up 7% in the last year and 26% since March, large gold miners are seeing a huge increase in returns. Yet perhaps one of the best has been Barrick Gold (TSX:ABX).

Why investors go to gold

Gold prices have remained steadily rising, as market uncertainty continues to weigh on the minds of investors. Experts believe the price will continue to climb over the summer, as banking institutions buy up the product as a safe choice.

It may be safe, but that doesn’t mean it’s growing. Gold itself just sits there — just like keeping your investments in cash. In fact, just like keeping your cash in an account, it doesn’t really create any income but merely keeps it safe.

That being said, miners of the product are certainly a great option instead. Gold miners do generate income and can take advantage of these higher prices — especially when financial institutions decide to buy it up. That is why investors should consider one of the world’s largest gold miners: Barrick stock.

Bright and shiny performance

Barrick gold certainly has been taking advantage of the rise in gold prices, beating out estimates for the first quarter recently. The company’s average realized gold prices hit $1,902 per ounce compared with $1,876 per ounce a year before. These higher prices helped the company along, even as production declined in the quarter.

Barrick stock brought in production at 952,000 ounces, down from 990,000 ounces a year before. Copper production also decreased to 88 million pounds from 101 million pounds last year. These came from a rough winter in northern Nevada, with maintenance also hurting the stock.

Even so, adjusted earnings came in at $0.14 for the quarter, beating estimates of $0.11. But Barrick stock wants more, and Chief Executive Officer Mark Bristow recently stated they’ll be fighting the Canadian government to achieve that.

Pushing back on foreign investment

Bristow recently stated there are opportunities to be had from foreign investment, specifically from China-backed companies. This comes as the United States and Canada both continue to attempt a clamp down on investments in the North American mining sector by foreign-controlled companies.

The government is doing this not just to hold on to money, but to also lower the risk of national-security concerns. Such investment has already been blocked by the Canadian government in the past. Barrick stock, meanwhile, already has partnerships in other parts of the world with Chinese-backed companies.

Bristow argues that it’s impossible to keep China out of the gold mining industry and, indeed, metals at large. The country is a large purchaser of the product, so Bristow states Canada should be seeking to deglobalize the two countries rather than divide them.

Bottom line

If investors are hoping for more growth, it could be hard come by. With mergers and acquisitions on hold at this time due to these government regulations, it could mean Barrick stock has a harder time finding growth opportunities. What’s more, with production down and gold prices eventually coming back to reality, share prices could soon fall.

As for now, Barrick stock remains down 5% in the last year, though it’s up 9% year to date.

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 Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

More on Metals and Mining Stocks

Super sized rock trucks take a load of platinum rich rock into the crusher.
Metals and Mining Stocks

First Quantum Minerals: A Copper-Clad Investment Opportunity?

Here are some key factors why First Quantum Minerals could be a great TSX stock to buy in 2023 and…

Read more »

tsx today
Metals and Mining Stocks

TSX Today: What to Watch for in Stocks on Wednesday, May 24

TSX investors will focus on Canadian bank earnings, U.S. debt ceiling talks progress, and Fed’s meeting minutes today.

Read more »

Gold bars
Metals and Mining Stocks

Franco-Nevada Stock: A Golden Opportunity for Precious Metal Investors?

Franco-Nevada is a top TSX stock that has surged 1,000% in the last 15 years. But is it a good…

Read more »

Nuclear power station cooling tower
Metals and Mining Stocks

Cameco’s Nuclear Renaissance: How Uranium Could Power Your Portfolio

Cameco is a popular Canadian stock for uranium exposure. Here's how I'd take it to the next level.

Read more »

Profit dial turned up to maximum
Metals and Mining Stocks

3 Stocks That Can Supercharge Your TFSA in 2023

Maximize your TFSA growth in 2023 with three high-potential stocks. Unleash the power of tax-free investing and accelerate your wealth.

Read more »

Safety helmets and gloves hang from a rack on a mining site.
Metals and Mining Stocks

TFSA: Investing in These 3 Mining Stocks Unlocks Real Benefits

TSX investors can stash their TFSA portfolio with quality mining stocks such as Lithium Americas and Barrick Gold right now.

Read more »

tsx today
Metals and Mining Stocks

TSX Today: What to Watch for in Stocks on Friday, May 19

Besides Canadian retail sales, U.S. debt ceiling negotiations and Fed chair Jerome Powell’s comments will remain on TSX investors’ radar…

Read more »

Super sized rock trucks take a load of platinum rich rock into the crusher.
Energy Stocks

Better Buy: Cameco Stock or NexGen Energy Stock?

Cameco stock may outperform as NexGen Energy stock falls short on supply contract portfolios, industry experience, revenue and cash flow…

Read more »