One of the simplest ways to fortify your mining-sector allocation is through targeted positions in well-respected names. Buying and holding Barrick Gold (NYSE:GOLD) stock, for example, is an easy way to align yourself with a major player in the precious-metals space.
Barrick is set to announce its first-quarter earnings results on the morning of May 6. This will be an event of significance among the resource community. After all, Barrick’s market cap of $48 billion dwarfs the majority of gold miners.
The preliminary quarterly results are available and the numbers look promising. Even with lockdowns resulting from the spread of the novel coronavirus, Barrick is likely to meet its fiscal targets and should continue to provide outstanding value to its shareholders.
A Powerful Producer in GOLD Stock
“The Fed can’t print gold” is a memorable recent quote attributable to Bank of America’s Michael Widmer. It’s a direct reference to the United States Federal Reserve’s penchant for printing dollars. The implication is that the dollar is likely to lose value, thereby making gold more attractive as an investment.
Widmer’s price target for gold is $3,000 per ounce. That suggests significant upside from the current gold price. Stocks representing gold companies, including Barrick, tend to do well during gold bull markets.
The target of $3,000 gold might or might not be achieved in the next couple of years. The exact number is less important than Widmer’s main point, which is that an aggressively accommodating Fed could be quite bullish for gold.
If you’d like to trade this thesis using mining shares, GOLD stock is ideally suited for that purpose. That’s because Barrick is known for producing massive quantities of gold.
In 2019, Barrick produced 5,465,000 ounces of gold. That’s a considerable increase compared to the 4,527,000 ounces of gold the company produced in 2018.
The company also ended the year with robust gold production. During the fourth quarter of 2019, Barrick produced 1,439,000 ounces of gold. Just as importantly, it maintained all-in sustaining costs of just $923 per ounce of gold during that quarter.
Maintaining the Pace
Now that we have the preliminary results for Barrick’s first quarter of 2020, it’s possible to anticipate how the company has done so far this year. And there’s no doubt that Barrick is maintaining a brisk production schedule even with the coronavirus-induced lockdowns in effect.
Specifically, Barrick announced that the company produced 1.25 million ounces of gold during 2020’s first quarter. That’s less than what Barrick produced in 2019, but it’s still impressive given the challenging circumstances presented by the coronavirus.
Not only that, but Barrick’s copper sales improved during that quarter. Furthermore, Barrick produced 115 million pounds of copper for the quarter, representing an 8.5% increase compared to the same quarter of the previous year.
The preliminary results are all the more encouraging as they point to a company that’s on track even during a global crisis. As Barrick CEO Mark Bristow noted, “These results positioned Barrick well to achieve its guidance for the year despite the impact of the global COVID-19 pandemic and the resultant lockdowns.”
And when we factor in the possibility of a rising gold price, the outlook becomes even brighter. During the first quarter, the per-ounce market price of gold was $1,583 on average.
The Federal Reserve’s currency printing activity could provide a powerful catalyst for the mining space in the form of much higher gold prices. And a mining giant like Barrick has the wherewithal to meet production targets if the demand for gold increases.
The Final Word on GOLD Stock
The idea of gold reaching $3,000 per ounce is certainly exciting to precious metal aficionados. However, a mining space leader like Barrick doesn’t need the gold price to go that high. GOLD stock offers tremendous value as the company can meet the demand for metals despite coronavirus-related issues.
Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.