The year 2024 was a rollercoaster ride for the stock market, with several events unfolding from the U.S. elections to Fed and Bank of Canada rate cuts. The easing of monetary policy revived demand and reduced the probability of recession. Gold tends to perform well when the paper currency weakens or there is economic uncertainty.
Barrick Gold stock in 2024
Canada’s Barrick Gold (TSX:ABX) is one of the biggest gold mines in the world. Investing in this gold mine stock can help you benefit from gold price and stock market volatility. In 2024, the stock price actually fell 2%, but in between it rose as much as 53% (February and October) over fears of a recession, escalating geopolitical tensions, and the U.Ṣ. presidential elections. As the storm calmed, investors cashed in their profits from Barrick Gold and invested in other stocks.
Since the pandemic, Barrick Gold stock has been more range-bound, despite gold prices rising since 2022 from $1,800 to US$2,600 per ounce. Barrick Gold’s stock price upside was capped at $27 and the downside between $19 and $22. While the gold price surged 44% in the last two years, Barrick Gold stock fell 3.3%.
Why didn’t Barrick Gold stock keep rising alongside the gold price?
Barrick Gold is a miner. While its inventory largely comprises gold, the miner faced operational challenges that led to a slower-than-expected ramp-up at the Pueblo Viejo mine. Its operating expenses rose faster than revenue due to lower production output and high input costs from inflationary pressure. However, rising gold prices helped Barrick Gold sell its inventory at a higher price, increasing its net profit.
Although production is improving, output is still lower than last year. Thus, its stock is underperforming the gold price.
Outlook for Barrick Gold Stock in 2025
Even though Barrick Gold stock underperformed gold in 2024 and the operational challenges are far from over, the stock could grow alongside the gold price in the short term. As per its Investor Day 2024 presentation, Barrick’s operating cash flow will increase by more than US$1.5 billion for every US$100/oz change in gold price. An improvement in operating efficiency could help push the stock price upwards.
This raises a question, will the gold price rise in 2025? Many analysts are bullish on gold. They do not see a significant correction but a significant jump in gold prices supported by geopolitical tensions and central bank purchases. Next year may witness some upheaval in global trade if the U.S. president-elect introduces significant tariffs on various U.S. imports. Such a move could shoot up inflation and drive gold prices.
Trump’s decisions could bring a change in the geopolitical situation. If you remember the 2018–2019 United States–China trade war initiated by Trump, the period of uncertainty drove gold prices. Even Barrick Gold’s stock price surged 23%.
How to make the most of the gold price outlook
You can maximize your returns on the prediction that the gold price will increase in 2025 by investing in Barrick Gold stock and the iShares Gold Bullion ETF. You could add Barrick Gold to your watchlist and buy the stock when it falls below $20. That is when most investors are in a sell mode. Even a $19.90 share price is a good entry point for this stock. Once you have the stock in your portfolio, consider selling it at the $27 price and book a 35% capital return.
Suppose you invest $1,000 in Barrick Gold. You can buy 20 shares and earn $1,350 by selling them for $27. You could consider reinvesting the entire $1,350 at the dip of $20 and selling at $27. This price range may fluctuate, but that is how you can maximize your returns from range-bound cyclical stocks.
You can mitigate the operational risks of Barrick Gold by diversifying your gold investment in the iShares Gold Bullion ETF, which mirrors the gold price. The gold ETF has a 0.55% management expense ratio. In the last year, while the gold price surged 44%, the ETF surged 33.7%, giving better returns than Barrick Gold without worrying about buying the dip.
