Barrick Gold [stock_market_widget type="inline" template="generic" color="default" assets="ABX.TO" markup="(TSX: {symbol} {currency_symbol}{price} ({change_pct}))" api="yf"] is one of the best senior gold producers you might want to take a look at in light of the favourable gold pricing environment. The stock has shot up more than 20% this year even after its latest pullback, and it could soon resume its journey higher thanks to a combination of further strength in gold pricing and the company’s focus on improving productivity and efficiencies.
Let’s take a closer look at the reasons why you should be considering Barrick Gold stock for your portfolio.
Higher Production in the Cards
Barrick Gold has been taking concrete steps to increase its output and reduce costs at the same time. First, it acquired Randgold Resources, and then, it struck a joint venture with Newmont in Nevada to create higher cost synergies.
The company has now received the green light to acquire African gold mining company Acacia Mining in a deal valued at $1.2 billion. This was the last hurdle that Barrick was facing in the way of completion of the deal.
Barrick was already holding nearly 64% of Acacia, and is now on track to control the complete output of the company. The good news for Barrick shareholders is that Acacia’s production is on the rise. As reported by Mining.com:
So it is not surprising to see why Barrick wanted to seal Acacia’s acquisition. However, Barrick will now have to deal with the Tanzania government that has imposed sanctions on the company. Acacia was served with a $190 billion tax bill, which was later reduced to $300 million. Barrick management believes that a merger was the only way through which the Tanzania government would improve its relations with Acacia.
So if Barrick manages to strike a deal with the government in Tanzania, Barrick will be able to give its output a nice boost.
Higher Gold Prices Will Be a Tailwind
The spot price of gold has been holding ground near the $1,500 an ounce mark and it could move higher as analysts project. Citi recently said that the price of gold could hit $2,000 an ounce in the coming months.
Citi’s projection is based on a continuance of the macroeconomic weaknesses and a potential for recession. If the U.S.-China trade war keeps raging on and the growth of major economies across the globe slows down, then gold prices could get close to Citi’s projection. That would be great news for Barrick investors as the company is taking the right steps to take advantage of a potential increase in the price of the yellow metal that could boost its financial performance in the future.
