Gold’s slip takes Barrick with it. What retail investors should know.
There’s a direct link between gold prices and shares of Barrick Mining Corporation. And over the past year, that symbiotic relationship has worked out in investors’ favor, with B stock prices nearly doubling alongside gold’s powerful rally.
But recent weeks have flipped the script. As gold prices pulled back sharply, Barrick stock fell even faster, leaving analysts struggling to determine how long the latest setback could last.
Tracking the downward trend
The recent selloff has been driven by a mix of macro forces and shifting investor behavior.
A few of the key factors include:
- A double-digit percentage drop in gold prices from recent highs
- Even steeper declines in silver, which Barrick also produces
- Elevated rates makes can make bonds look more attractive than metals
Meanwhile, a stronger currency in the US is reducing global demand for commodities priced in dollars. And as a mixed metals producer, Barrick has felt the impact directly as its stock decline has outpaced gold.
But the setup has some analysts seeing signs of opportunity. Barrick shares are trading below industry averages at around 13-14x while offering a roughly 4% dividend yield. And if metal prices rebound, forecasts put forward valuation closer to 10x earnings.
What the roadmap looks like from here
No matter what Wall Street predicts, Barrick is a commodity-driven stock that can experience sharp and unpredictable short-term moves. That isn’t stopping institutions from maintaining a “moderate buy” rating on the name, though. Price targets at or above $55 imply meaningful upside from recent levels and annual earnings are expected to grow by around 49% this year.
Big money remains very interested in B stock with roughly 90% of all shares held by institutional investors like Vanguard Group.
As for what’s supporting that bigger-picture confidence, many analysts point to geopolitical uncertainty as a possible driver of gold demand. Copper, which is another focus of Barrick’s business, also faces long-term supply shortages. And the company’s strong margins put it in a position to benefit when prices recover.
On the other hand, some institutions have trimmed their positions on concerns about rising costs and inconsistent production.
Just like gold itself, Barrick’s pullback doesn’t mean the long-term growth story has come unraveled. But investors betting on Barrick should always remember they’re really betting on the future of gold … so putting money in the former requires confidence in the latter.