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Barrick Gold Corporation is a gold and copper mining company headquartered in Toronto, Ontario, Canada. Peter Munk founded the company in 1983. As of August 2021, Barrick has 16 sites in thirteen countries and it prides itself as a company that operates Tier One mining assets – these are assets large in size and have significant mining resources. The company also boasts a strong balance sheet that has been enabled by its continued focus on lowering its debt and production costs. Barrick Gold hopes these strong fundamentals will help guarantee sustainable growth in the volatile commodities market as well as achieve its stated mission of becoming the world’s most valuable mining business.
Barrick Gold is a keen and strategic player in the mergers and acquisitions pool. The company has made a few quality buys in the mining and metals sector, with the most notable being the 2018 all-stock merger with Randgold Resources. As a disciplined capital allocator, Barrack Gold is always keen on having an optimised active portfolio. This has seen the company make profitable divestitures of non-core assets. The most significant recent divestiture is the sale of Barrick Energy to Canadian Natural Resources for $173 million.
Barrick Gold is dually listed on the Toronto Stock Exchange, where they trade under the ticker symbol ABX, and on the New York Stock Exchange, where they trade under the ticker symbol GOLD.
Barrick Gold Stock History
Barrick Gold has never implemented a stock split in its history, and its stock has always been attractive in its industry.
Barrick’s share price was around the $20-price handle at the turn of the millennium. The stock sustained a steady rally that saw it break above $50 in January 2008. The effects of the 2008 global financial crisis then pressured the stock lower to below $20 by October 2008. The stock then subsequently posted an impressive recovery that saw it print an all-time high (as of August 2021) of just above $55 in April 2011.
This rally was then halted as negative fundamentals weighed down on the stock. Falling commodity prices, Chinese growth concerns, as well as a strengthening US dollar saw the stock tumble to lows of circa $6 by September 2015. The stock has since posted a steady recovery, settling above $20 in 2021.
Barrick Gold’s financial discipline has ensured that the company is able to offer generous and sustainable dividends to its shareholders. While dividend stocks can be volatile in the short term, they can be highly lucrative because they offer a stable stream of income to investors.
How to Trade ABX/GOLD Stock
Here are the factors to consider when trading Barrick Gold stock:
- Legislative and Taxation Issues
Barrick Gold has large assets in multiple jurisdictions, leaving the company vulnerable to legislative and taxation changes. Additionally, its operations ensure that the company faces different challenges that range from environmental concerns and labour laws to mining taxes and other legal issues. Positive legislative and taxation changes can inspire higher stock prices, while negative changes could pressure the stock lower.
- Commodity Prices and FX
Commodity prices are volatile in nature, and this has a massive impact on the price of Barrick Gold shares. Higher commodity prices increase the margins of Barrick Gold and consequently inspire a higher stock price, whereas lower commodity prices limit the company’s margins and pressure its stock lower. There is also FX risk, with its operations in multiple countries that are prone to political tensions.
- Negative PR and Lawsuits
Barrick Gold’s activities over the years have generated headlines that have influenced the stock price. The company has been the subject of negative headlines, such as spills of metals, cyanide, and mercury, that have poisoned human populations and damaged the environment. The company has also attracted lawsuits that have ended up in massive liability settlements that have impacted its overall profitability. Bad publicity and lawsuits can pressure the Barrick shares lower, whereas good headlines, such as environmental compliance, can inspire investor confidence.
Barrick Gold has strong fundamentals that give the company an edge over its peers. It has quality and large reserve assets, which it complements with proper fiscal discipline. But stable profitability in the industry has attracted fierce competition from major mining companies such as Alamos Gold, Allied Nevada Gold, Sempra Energy, and China Minmetals. Like Barrick, the major companies are able to leverage data and advanced technology to minimise their overall costs. Furthermore, competition also comes from numerous local distributors who have massive advances in some markets.
- Periodic Earnings Reports
Barrick Gold’s fiscal year runs from January to December, and the company releases periodic earnings reports that update investors on its business health and performance. The key metrics to watch are usually production numbers, proven and probable reserves, cost of sales, as well as future guidance. Strong numbers are good for the stock, while weak numbers can push the stock lower.
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