Gold has been on a steady rise throughout the course of the year owing to economic uncertainties. As a result, gold stocks like Barrick Gold (TSX: ABX) (NYSE:ABX) had also enjoyed gains. However, the gradual recovery in the global economy and the possibility of a new vaccine from Pfizer has come as a blow for stocks like Barrick. It has declined by 12% in the past few days and it could be worthwhile to figure out if it could be a bargain for investors.
Gold Remains Strong
While the recovery may have triggered a decline in the Barrick stock, it should be noted that the stock has displayed strong momentum and gold remains strong. The price of gold has declined by only 9% since August.
Much of the decline is due to lower coronavirus fears and the possibilities of the vaccine from Pfizer. That being said, structural long term problems are still at large and fresh lockdowns in Europe, in addition to fears of a second wave in North America are problematic factors for the global economy.
Hence, in this regard, it should be kept in mind that gold could rally once again. On top of that, over a longer period, gold has managed to record significant gains. These are positives for Barrick Gold, which is one of the biggest players in the industry.
Things to Consider
Investors need to consider certain key factors when it comes to Barrick Gold. The company, which used to have a mountain of debt, managed to reduce its debts by as much as 71% to knock it down to $417 million.
However, more importantly, the company used the cash it generated in the quarter to raise its dividend payout by as much as 12.5%. That could prove to be an attractive development for many investors.
That being said, the current prosperity at Barrick and many other gold companies is almost entirely related to the rising price of the precious metal.
Although the announcement regarding Pfizer’s COVID 19 vaccine is a massive positive, there is still a lot of time before it is approved and made available to the masses.
The virus still exists and so does the threat to the economy. In such a situation, gold is expected to remain as the safe-haven investment of choice for most investors. Hence, it could be a good idea for investors to keep the Barrick Gold stock on their watch lists.
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