Barrick Gold Stock Review
Owning gold physical is only one way of precious metal investment. However, it is not an option for everyone. Investing in gold stocks is an alternative way of investing in gold.
It gives investors peace of mind without worrying about how to store their gold.
However, gold stocks are different than gold. When you invest in gold mining stocks, you buy shares in the company that mines gold and not the gold itself.
The advantage of having gold stocks is earning dividends if the company's operation becomes profitable.
About Barrick Gold
Barrick Gold Corporation (NYSE: GOLD) is one of the world's largest gold companies. It is a massive producer of gold and copper.
It has 16 operating sites scattered in 13 countries and five continents, including Argentina, Chile, the Democratic Republic of the Congo, Mali, Saudi Arabia, Tanzania, etc.
Barrick Gold's headquarters is located in Toronto, Ontario, Canada, and was the largest gold mining company in the world until Newmont Corporation acquired Goldcorp in 2019, pushing barrack to second place in the world.
In 2019, the company produced 5.5 million ounces of gold and had 71 million ounces of proven gold reserves, and in 2020, it produced 4.8 million ounces of gold.
The company has its stock listing in the New York Exchange and can be traded on the S&P 500 Index, making its stock more visible and accessible to potential clients. It is also listed on the Toronto Stock Exchange.
The company aims to become the world's most reliable gold mining company. It focuses on increasing total returns for shareholders and aims to increase earnings and to operate cash flow.
Barrick Gold achieves these by increasing annual gold production, growing its reserve base by discovering, developing, and acquiring new projects.
One of Barrick Gold's most essential and largest mines in the Nevada Gold Mines. It comprises 10 underground and about 12 opencast mines. The company owns 61.5% of the gold mine, while Newmont, its merger partner, owns the remaining 38.5%.
Why Should I Invest in Barrick Gold Stock?
Besides the fact that Berkshire Hathaway (NYSE: BRK.B), led by its CEO Warren Buffet bought $562 million in shares of Barrick towards the end of 2020 after years of dismissing gold stocks as a viable investment option, another thing is that gold prices have skyrocketed.
About 60% of gold demand stems from the jewelry, electricity, and medical industries, while the other 40% comes from investors.
The need for gold is stable, and this demand dictates the price of gold. Gold is a real asset to own, unlike currencies, which are merely financial assets.
The surge in the gold price will mean better dividend yields for you because as the prices rise, so do the profits you get to make when you purchase a share in Barrick Gold's stock. Investing in gold stock is a way of hedging against other assets' value.
Barrick Gold shares can also be used as a hedge against inflation. It is probably the reason Berkshire Hathaway bought it. Gold price is based on supply and demand, and there is rarely a surge or rapid increase in supply because supply is relatively constant.
Inflation can happen at any time, trade issues between U.S and China are still brewing, the economy is unpredictable, and a whole lot of other concerns are reasons why you should invest in Barrick Gold shares.
Barrick Gold has a strong balance sheet with a high cash position and a relatively low net debt, making it a consistent company. The company shares trades at around 13x recent earnings, which is relatively low, meaning that it is quite undervalued.
The company has also outperformed the gold industry. Barrick Gold has rallied 81.3% rise as against the 65.8% by the industry in the space of a year. In the process, it overtook the S&P 500's 9.1% rise.
Barrick Gold Corporation has recently paid around 38.75% of net profits as dividends. This places the company in the position of “forward annual dividend yield” with 1.61% of the current stock value.
Practically, this means that in over a year, for instance, based on recent payouts, Barrick Gold Corporation shareholders could enjoy a 1.61% return on their shares in the form of dividend payments. That is about $0.36 per share.
While Barrick Gold Corporation's payout ratio might seem fairly standard, it's worth remembering that Barrick Gold Corporation may be investing much of the rest of its net profits in future growth.
The company is very focused on expansion and development, with its acquisitions of more mines and companies. No wonder it is about the largest gold mining corporation in the world.
The company recently paid out dividends in December 2020 to all shareholders who purchased shares by 27 November 2020.
The company's Price/Earnings-to-growth ratio is calculated by dividing the Price/Earnings ratio by the growth. If the rate turns out low, it means the shares offer better value, but it means the shares' value is terrible if it's high.
This gives you a better view and understanding of the corporation's expected profit margins than the P/E ratio. It is also useful to help you compare other corporations' share prices.
Short Interest ratio
To calculate this, you will divide the quantity of Barrick Gold shares currently shorted by the average amount of the shares traded daily. The current SIR of Barrick Gold is 0.81, meaning that if there are 100,000 Barrick Gold shares traded daily, 810 shares are currently held short.
The SIR can also be measured against the company's shares or the total number of tradable shares. This will provide a low SIR, which means that it is a good thing and indicates that fewer people will want to bet against the company's shares.
How to buy Barrick Gold shares?
Buying Barrick gold stock may be one of the smartest decisions to make at this time. With surging gold prices and economic uncertainties, the gold-stock has become a ” haven” and a goldmine of an investment.
It is quite simple to purchase Barrick gold shares. Here are the steps;
- Select your preferred brokerage: Look for a platform that offers low commissions, has expert ratings and investment tools to track your portfolio. Also, use a brokerage that will provide you with educational materials and easy access to customer care or financial experts for consultations or questions when confused. Many brokerages offer the basic requirements, but take your time to find out the one that works for you.
- Fund your account: After downloading the brokerage and filling out the registration form with your personal and financial data, you should then fund your account via bank transfers, credit, or debit card.
- Search for Barrick Gold Corporation: Look for the stock in the search space by typing in the name or ticker symbol: GOLD. Look through its history to be sure it suits your investment and financial expectations.
- Decide how many shares you want: You can choose how many claims you wish to purchase by weighing your budget against available claims that have the potentials of minimizing risks. You can buy Barrick Gold shares using this strategy, depending on what broker you're using. Transactions are made in dollars, and you can convert from dollars to shares acquisition by dividing the dollar amount that you intend to buy using the market price of the stock you wish to purchase.
- Choose your order type: There are different order types for buying shares. This is because of stock value fluctuations. Some of the order types are;
- Bid: This is the highest price a buyer will pay for a stock. It is usually shallow compared to the stock in question.
- Ask: It is the least price a stock seller is willing to accept, and it is usually higher than the bid.
- Spread: This can be referred to as the difference between the bid and the asking price. How investments work is to earn dividends on predictions that your stock of choice will increase in value. On the other hand, marketers earn by the difference of stock acquisition price and the price at which you buy from them.
- Limit order: This is the special price you intend to buy or sell a stock. Such a transaction cannot go through unless it is per your fixed price. But sometimes, the disadvantage of setting this price is that there is no assurance that the stock will attain your set price.
- Market order: This is a request to purchase or sell a stock at the next available price offered. These orders are most times unfavorable because while it is possible to buy at the next available price, you can only sell at the bid price.
- Stop-loss order: This is the price you set to exit out of your shares if you fear the stock will fall in value. That guarantees you earn something instead of losing all your investments.
- Stop-limit order: This further helps you recoup something from a stock value fall. You can set the price you want to sell off your stocks instead of selling them outright. The downside is that the stop may not get to your fixed price and the stop-loss order becomes the favorable option.
- Start trading and checking on your investments: Now that you know the ropes of Barrick Gold shares, you can start trading and optimize your portfolio by tracking your stock and the market in general while you expect dividends.
Buying gold mining stocks can be a good decision provided you choose a legit business to invest in. Because you invest in the growth of a mining business, along with the inflation-proof value of gold. It is no wonder, gold will keep its value, as it always has.
Barrick Gold stocks offer you a reliable investment platform to start gold trading. The company is the largest globally and scores lowly when you check its sustainability. Low scores are good scores when checking the ESGs of companies.
That means the company's Environmental, Social, and Governance metrics used to rate a company's social impact in its host community or country.
The shares are affordable, and the dividend yield is tangible compared to that of other companies.
Barrick Gold also ranks #2 according to Zacks and has a VGM Score of B, making it a safe and high-quality investment opportunity for you if you are new to gold investments.