The actions of Barrick Gold Corporation (NYSE: GOLD) , one of the world’s largest gold producers, have lost 24% of their value since mid-April, although they remain up around 6% since the start of the year. There are a few factors that have weighed on the stock recently. First, gold prices have been declining over the past few months, falling around 10% from $2,050 an ounce in mid-March to levels of $1,825 currently, with prices also remaining slightly down since the start of the year. The drop comes as the Federal Reserve is raising interest rates at a more aggressive pace to curb soaring inflation. Rising rates led to a stronger US dollar and a recovery in Treasury yields – both considered safe havens – putting pressure on the price of non-performing bullion. Barrick’s gold production in the first quarter also fell 10% from a year ago, due to lower production at its Carlin and Cortez mines in Nevada, while company profits have also come under some pressure due to supply chain issues and increased Covid-related costs. -19.
However, we believe these developments could ultimately bode well for precious metals. Indicators point to a recession in the United States in the short term, with an inverted yield curve, which is considered a fairly reliable predictor of economic slowdowns. Consumer confidence in the United States is also down as high inflation puts pressure on household budgets. Geopolitical uncertainties have increased following Russia’s continued invasion of Ukraine. Trefis believes these factors are likely to support gold prices until global macroeconomic and geopolitical stability is achieved. Given that more than 90% of Barrick’s sales in 2022 came from gold, there could be a rally in the stock if investors end up looking for safe havens. Additionally, Barrick’s focus on copper should also be beneficial to the company in the long term, as the metal sees increased demand as the global economy shifts towards green energy solutions and vehicles. electrical. Barrick’s revenue from copper grew by more than 75% in 2021 and nearly 37% in 2022. The company could also have an advantage over other miners, given that copper often sits alongside gold. gold in large-scale deposits and which Barrick has also proven adept at working. in developing markets like Africa and Pakistan, where other Western players have been reluctant to venture.
We estimate Barrick Gold valuation at $25 per share, about 25% above the current market price. See our analysis of Barrick Gold Revenues for more details on the company’s business model and major sources of revenue.
Stock prices have fallen precipitously across all sectors over the past few months and we are now in a bear market for the first time since March 2020, when the Covid-19 outbreak triggered a stock market crash. We capture key Dow Jones trends during and after major stock market crashes in our interactive dashboard analysis,’Comparison of stock market crashes.’
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