Barrick Gold At The Junction Of Positive Macro And Micro Trends; Raising My Target Price

It’s by no means a guarantee of gains, but owing shares of a company that is riding the wave of positive macro and micro trends does indeed usually result in solid profits.

On the macro side, Barrick Gold has global trends pointing toward toward higher gold prices as on lower interest rates as central banks try to jump start growth in slowing economies with the spark of cash, cash, and more cash. It can also look forward to rising gold prices as investors worried about recessions, inflated currencies, and financial market risk look to find a safe haven.

On the micro side, for the June second quarter, the company reported producing 1.4 million ounces of gold, more than 30% higher than a year ago. All-in sustaining costs rose slightly–up 2%–to $869 an ounce from the $856 per ounce in the second quarter of 2018. For the full 2019 year the company expects to produce near the high end of its guidance of 5.1 million to 5.6 million ounces of gold. All-in sustaining costs were projected near the low end of guidance for $869 to $920 an ounce.

So a substantial increase in production with only a modest increase in cost at a time when gold prices are expected to climb.

And just a reminder to investors that Barrick Gold’s shares are leveraged to the price of gold. In the two months to August 12, when gold was moving up a solid 15%, shares of Barrick Gold gained 45%.

As of September 7, I’m raising my target price to $23 a share from the prior target of $21 a share. Shares of Barrick Gold are up 17.95% since I added them to my Jubak Picks portfolio on June 28, 2019.