With gold prices firming up, is Barrick Gold stock a buy?
The actions of Barrick Gold Corporation (NYSE: GOLD) have done reasonably well over the past month, rising around 7%, although they remain down around 9% year-to-date. The recent gains come as the price of gold – which accounts for more than 90% of Barrick’s revenue and remains the main driver of the share price – sees gains. Prices for the yellow metal have risen around 10% since early November, currently trading at around $1,802 an ounce, following weaker-than-expected US inflation figures in November and signs that the Federal Reserve will slow the pace of its rate hikes. The yield on 10-year Treasury bills, which is also considered an alternative safe-haven asset, has fallen from around 4.2% in early November to around 3.7% currently. Energy prices have also cooled somewhat in recent months, which could help reduce the company’s gold production costs, which would help margins in the medium term.
So, is Barrick Gold stock still a buy after the recent rally? Gold prices could record further gains, given the challenging global economic outlook and growing macroeconomic uncertainties. The United States is widely expected to slide into a recession, while China also faces headwinds as Covid-19 cases soar. Russia’s war in Ukraine, which is about to enter its second year, also remains a concern, particularly for European economies. These factors could make gold a bit more attractive, which would help price realization for Barrick, which is one of the largest gold producers in the world. Barrick also appears well positioned to navigate a potential recession and rising rate environment, given that it has deleveraged its balance sheet in recent years. Separately, Barrick’s move to expand its copper business could drive the stock higher given its application in a host of futuristic industries. Although the business represents less than 10% of Barrick’s overall sales, it is growing rapidly. During the third quarter of 2022, copper production increased 23% year-over-year to 123 million pounds.
We have a price estimate of $19.50 for Barrick Gold, which is around 13% ahead of the current market price. See our Barrick Gold valuation analysis for more details. Also see our Barrick Gold revenue analysis for more details on the company’s main sources of revenue and how they have evolved.
What if you were looking for a more balanced portfolio instead? Our quality portfolio and multi-strategy portfolio have consistently beaten the market since the end of 2016.
|S&P 500 return||-6%||-20%||71%|
|Trefis Multi-Strategy Portfolio||-6%||-23%||212%|
 Cumulative monthly and cumulative annual as of 23/12/2022
 Cumulative total returns since the end of 2016
Invest with Trefis beat the market Wallets
See everything Trefis Price Estimates
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.