20.38 -0.11 (-0.54%)
Pre-Market: 7:15AM EST
|Bid||0.00 x 1000|
|Ask||0.00 x 800|
|Day's Range||20.23 - 20.61|
|52 Week Range||17.28 - 24.86|
|PE Ratio (TTM)||N/A|
|Beta (3Y Monthly)||-0.05|
|Expense Ratio (net)||0.53%|
Gold stocks are selling at attractive discounts relative to historical measures even as gold prices have bounced back 10% from their 52-week lows. This is offering investors unique opportunities to buy equity assets that could hold or even rise in value in the case of a prolonged bear market or recession, including stocks such as Newmont Mining Corp. (NEM), Goldcorp Inc. (GG), Barrick Gold Corporation (GOLD), and ETFs like VanEck Vectors Gold Miners ETF (GDX) and the SPDR Gold Trust (GLD). Rising gold prices and a mining industry that has become more rational in recent years through a rash of mergers has made the gold sector an alluring bargain, according to Barron’s.
Which Five Gold Stocks Are Analysts Loving So Far in 2019?(Continued from Prior Part)Analysts’ ratings for WPMAmong major gold (GLD) (IAU) mining and gold streaming companies (GOAU), Wheaton Precious Metals (WPM), the world’s largest precious
Which Five Gold Stocks Are Analysts Loving So Far in 2019?(Continued from Prior Part)Gold miners’ leveraged performance Gold miners are usually a leveraged play on gold prices. Even in 2018, as gold prices (GLD) fell 1.9%, the VanEck Vectors Gold
Which Five Gold Stocks Are Analysts Loving So Far in 2019?(Continued from Prior Part)Analysts’ ratings for Agnico Eagle MinesOf the 18 analysts covering Agnico Eagle Mines (AEM), 83.0% have given it “buys,” while the remaining 17.0% have
Investors are shell-shocked, and with reason; the stock market plunged in its worst December since the Great Depression! This fueled uncertainty, concern and outright panic, observes Mary Anne & Pamela Aden, resource experts and co-editors of The Aden Forecast.
Could the Newmont-Goldcorp Merger Form ‘The Go-To Gold Equity’?(Continued from Prior Part)Newmont’s and Goldcorp’s valuation Among senior miners (GDX), Newmont Mining (NEM) has the highest EV1-to-EBITDA multiple, 8.2x, which is 2% lower
Could the Newmont-Goldcorp Merger Form ‘The Go-To Gold Equity’?(Continued from Prior Part)Newmont to pay a 17% premium for GoldcorpNewmont Mining (NEM) has agreed to pay a 17% premium to acquire stock from Goldcorp (GG), which has been
Could the Newmont-Goldcorp Merger Form ‘The Go-To Gold Equity’?(Continued from Prior Part)Agnico Eagle MinesWhereas several gold (GLD) mining companies are likely to see M&As (mergers and acquisitions), Agnico Eagle Mines (AEM) may not be
Gold miner shares were slightly lower in midday trade Friday, as Newmont Mining Corp.'s $10 billion stock deal to buy Goldcorp Inc. actually had a negative affect on the sector. The VanEck Vectors Gold Miners ETF slipped 0.1%, although 25 of the 47 equity components traded higher. Acquiree Goldcorp's stock ran up 7.3% to pace the gainers, but acquirer Newmont shares tumbled 8.3% to lead the losers, amid concerns over the dilutive effect of an all-stock deal. As of Friday's close, Newmont's weighting in the ETF was 8.96% of net assets while Goldcorp's weighting was 4.50%. Among other more active U.S.-listed ETF components, shares of Barrick Gold Corp. fell 0.4%, Hecla Mining Co. tacked on 0.9%, Gold Fields Ltd. gave up 1.5% and Kinross Gold Corp. advanced 0.2%. Meanwhile, gold futures gained 0.2% and the S&P 500 declined 0.4%.
Newmont and Goldcorp Merger to Create World’s Leading Gold Miner ## Newmont-Goldcorp merger Today, Newmont Mining (NEM) and Goldcorp (GG) announced that they have entered an agreement in which NEM will acquire all of the outstanding shares of Goldcorp in a stock-for-stock transaction valued at $10 billion. Newmont will acquire each share of Goldcorp in exchange for 0.3280 NEM shares, which represents a premium of 17% based on the companies’ 20-day volume weighted average stock prices. ## Sector-leading gold combination Newmont Goldcorp’s reserves will be among the largest in the gold sector (GDX) (GDXJ). Moreover, the combined entity is targeting $1.0 billion–$1.5 billion in divestitures over the next two years to optimize gold (GLD) production at a sustainable rate. As per the press release, “In addition to providing shareholders the largest gold Reserves per share, Newmont Goldcorp will offer the highest annual dividend among senior gold producers.” ## Following Barrick-Randgold merger This transaction comes on the heels of the merger of Barrick Gold (GOLD) with Randgold Resources, which was completed on January 2, 2019. On September 24, Barrick Gold agreed to acquire Randgold Resources in a share-for-share deal. The merger created a sector-leading gold company, which owns five of the industry’s top ten Tier 1 gold assets. The combined entity has a market cap of ~$23.75 billion. It will also have the largest gold reserves among its senior gold peers (GDX) (NUGT). You can read Is Barrick Worth a Look after Its Merger with Randgold? for more details about the merger.
Jim Cramer Suggests Nervous Investors Buy Gold Now ## Cramer suggests adding gold Mad Money host Jim Cramer is advising investors to invest in gold (IAU) if they’re concerned about the Fed’s interest rate policy and the trade conflict between the US (SPY) (IVV) and China (FXI). Cramer said, “If you’re looking for an insurance policy against volatility and economic uncertainty, gold is a great way to go.” He added, “While I like the stock market here, as you know, now that the Fed has decided to be more patient, the whole point of diversification is to be prepared in case something goes wrong … and your thesis doesn’t pan out.” Read Bulls versus Bears on Wall Street: Time to Buy Gold in 2019? for major analysts’ take on the gold price outlook in 2019. ## What should investors buy? However, Cramer doesn’t recommend buying the actual metal. Instead, he recommends direct exposure through the SPDR Gold Shares (GLD), which is the largest gold-backed ETF. He thinks that GLD and other gold mining ETFs (GDX) (NUGT) reduce risk and inconvenience. In addition to GLD, Cramer also recommends a high-quality gold producer like Barrick Gold (GOLD). Recently, Barrick Gold and Randgold Resources’ merger was finalized, which canceled Randgold’s London listing. ## Barrick-Randgold merger created a mining behemoth Regarding the Barrick Gold and Randgold Resources merger, Cramer likes the merged company. He said, “The company has the lowest total cash costs among its peers — I like that — [and] it has a nicely diversified portfolio of assets across the world — I love that.” Read Is Barrick Worth a Look after Its Merger with Randgold? for more details on the new company’s operating metrics and its outlook after the merger.
Despite a wild ride in the stock market late last year, VanEck is holding steady as one of the top 10 ETF providers in the U.S.
This suggests that both gold and gold-mining shares are likely to struggle in coming weeks. Consider the average recommended gold market exposure level among a subset of short-term gold timers monitored by my Hulbert Financial Digest (as measured by the Hulbert Gold Newsletter Sentiment Index, or HGNSI).
Is Barrick Worth a Look after Its Merger with Randgold? (Continued from Prior Part) ## Valuation Among senior miners (GDX), Barrick (GOLD) has the second-highest EV-to-EBITDA (enterprise value-to-EBITDA) multiple of 6.6x, which represents a premium of 1% to its historical multiple. Its multiple has rerated since its announcement of its merger with Randgold Resources (GOLD) to form an industry-leading gold company (SGDM) with the greatest concentration of Tier 1 gold (GLD) assets. Since the announcement of the merger, GOLD’s multiple has expanded 18.5%. Among its peers, Newmont Mining (NEM), Goldcorp (GG), and Kinross Gold (KGC) are trading at multiples of 8.2x, 6.2x, and 4.9x, respectively. ## Catalysts As we discussed in Is the Barrick-Randgold Merger Enough of a Reason to Bet on ABX? Barrick’s costs are expected to fall, and its production profile is expected to improve on low-cost, high-quality assets after the merger. Since it owns five of the top ten Tier 1 assets in the world, its unit costs are expected to be significantly lower than its peers’. However, its new position will also add to its geopolitical risk. ## Problems to overcome Most of Randgold’s operations are in Africa. Due to many African countries’ rising resource nationalism and ambition to secure bigger shares in mining activities, many mining companies are facing difficult times operating in these jurisdictions. Political problems in these countries could add to Barrick’s operational risks. In addition, market participants worry that the working styles of John Thornton, the new company’s executive chair, and Mark Bristow, its CEO, will clash, leading to problems for the company down the line. As we discussed earlier in the series, the resolution of the company’s dispute with the Tanzanian government could be another major catalyst for its stock. To achieve further upside, the company will need to show more execution on its projects and resolve its disputes successfully. Browse this series on Market Realist: * Part 1 - Is Barrick Worth a Look after Its Merger with Randgold? * Part 2 - Will the GOLD Merger Expedite the Tanzania Dispute’s Resolution? * Part 3 - Barrick Could Emerge Leaner and Stronger after an Asset Review
Is Barrick Worth a Look after Its Merger with Randgold? (Continued from Prior Part) ## Factors affecting Barrick’s estimates Barrick Gold (GOLD) significantly outperformed its peers in 2018. Its stock performance improved after the announcement of its merger with Randgold Resources. Most analysts are positive about the new company’s prospects following the merger. However, they’re waiting for the combined entity’s execution on its stated priorities and its resolution of other matters, such as its Tanzanian tax issues. ## Analysts’ revenue estimates Wall Street analysts expect Barrick to see revenue of $7.3 billion in 2018, implying a 13.0% fall YoY (year-over-year). The company expects its production to fall 11.0% between 2017 and 2018. This expected fall in production has been the main driver of analysts’ lower revenue estimates for the company in 2018. For 2019 and 2020, however, analysts expect Barrick’s revenue to rise 11.9% and 1.0%, respectively, due to the merger of Barrick and Randgold. Prior to the merger, Barrick’s revenue profile was on the decline. Among Barrick’s close peers (GDX) (JNUG), Newmont Mining (NEM), Goldcorp (GG), Agnico Eagle Mines (AEM), and Kinross Gold (KGC) have strong production growth profiles. ## Earnings estimates Analysts expect rather impressive growth in EBITDA for Barrick post-2018 due to merger synergies. While the company’s expected EBITDA for 2018 is $2.97 billion, implying a fall of 26% YoY, its growth in 2019 and 2020 is expected to be 11.1% and 10.2%, respectively, higher mainly due to the expectation of cost improvements in the new company. Continue to Next Part Browse this series on Market Realist: * Part 1 - Is Barrick Worth a Look after Its Merger with Randgold? * Part 2 - Will the GOLD Merger Expedite the Tanzania Dispute’s Resolution? * Part 3 - Barrick Could Emerge Leaner and Stronger after an Asset Review
Is Barrick Worth a Look after Its Merger with Randgold? (Continued from Prior Part) ## Multiple upgrades for Barrick Most analysts are positive on Barrick (GOLD) regarding its merger with Randgold Resources. Immediately after the merger announcement, Citi (C) analyst Alexander Hacking upgraded Barrick Gold from a “neutral” to a “buy” and raised its target price from $11 to $14. According to The Fly, the analyst believes that the acquisition is a win on two levels. Barrick Gold gets a new CEO, who is one of the most successful CEOs in the sector, and the move adds “significant credibility” to the turnaround. TD Securities also upgraded Barrick Gold from a “hold” to a “buy” after the announcement of the acquisition. ## CIBC resumed coverage with an “outperform” On January 2, CIBC analyst Anita Soni said that following the merger, there’s a 26% upside for the stock from its 2018 closing price. CIBC resumed coverage of Barrick with an “outperform” rating and a target price of $17. The company believes that the new entity’s strong management team and high concentration of Tier 1 assets should drive industry-leading returns. ## Barrick’s outperformance since the merger Overall, the merger seems to be positive news for the market as well. Barrick stock has risen 25% since the announcement of the merger as of January 4. In comparison, the VanEck Vector Gold Miners ETF (GDX) and the SPDR Gold Shares ETF (GLD) have risen just 13.4% and 7.0%, respectively. Peers Goldcorp (GG) and Yamana Gold (AUY) have returned -8.4% and -2.4%, respectively, in the same period. Continue to Next Part Browse this series on Market Realist: * Part 1 - Is Barrick Worth a Look after Its Merger with Randgold? * Part 2 - Will the GOLD Merger Expedite the Tanzania Dispute’s Resolution? * Part 3 - Barrick Could Emerge Leaner and Stronger after an Asset Review
Is Barrick Worth a Look after Its Merger with Randgold? The merger of Barrick Gold (GOLD) and Randgold Resources will be a step toward improving the combined entity’s shareholder returns. To achieve these returns, the new Barrick will undergo a critical review of its asset base and decide whether to dispose of some of its assets.
Is Barrick Worth a Look after Its Merger with Randgold? (Continued from Prior Part) ## Tanzanian tax dispute One of the major overhangs on Barrick (GOLD) stock of late has been its subsidiary Acacia Mining’s issues with the Tanzanian government regarding taxes. The Tanzanian government banned mineral concentrate exports from the country in March 2017. It believed it wasn’t getting a fair share of profits from mining in the country. On October 19, 2017, Barrick announced that it and the government had agreed on a framework for a new partnership between Acacia and the government. The partnership would include the sharing of economic benefits generated by Acacia on a 50-50 basis going forward. However, this framework has yet to be implemented, and the issues are still ongoing. ## Bristow on resolution Mark Bristow, the CEO of the combined company, has expressed confidence that this conflict will be resolved. In a phone interview with Reuters, Bristow said that Barrick could buy the remainder of Acacia it doesn’t own or split the company among other options. He added, “This conflict has destroyed lots of value. We need to make sure there’s enough value to work out a solution that various interested and affected parties get something that’s fair and proper for them.” ## Bristow’s experience to come in handy Bristow has experience in resolving tax and other issues with governments in Africa. Lately, many miners (GDX) (NUGT) have been facing issues related to resource nationalism and governments demanding increased shares of mining from their countries in Africa. This phenomenon has also affected the likes of Kinross Gold (KGC) and Newmont Mining (NEM). Barrick expects more details on the resolution of the Tanzanian issue in the second week of February. In addition to a possible resolution, the company is expected to see a lot of other changes in February. It’s also reviewing the possible sale of a number of assets, and it could even acquire new assets. We’ll discuss more about these changes and other portfolio restructuring initiatives in the next article. Continue to Next Part Browse this series on Market Realist: * Part 1 - Is Barrick Worth a Look after Its Merger with Randgold? * Part 3 - Barrick Could Emerge Leaner and Stronger after an Asset Review * Part 4 - Could the Cleanup at GOLD Lead to Increased Shareholder Returns?
Is Barrick Worth a Look after Its Merger with Randgold? ## Barrick-Randgold merger complete The Barrick Gold–Randgold Resources (GOLD) merger recently completed, with the trading of new shares starting on January 2, 2019. The new company’s name remains Barrick, but its symbol will now be GOLD—previously Randgold’s symbol on the NASDAQ—on the NYSE. Randgold’s London listing has been canceled. The new company’s executive chair will be John Thornton, and its CEO will be Mark Bristow, former CEO of Randgold. ## Leading market position On September 24, Barrick Gold agreed to acquire Randgold Resources in a share-for-share deal. The merger has created a sector-leading gold company that owns five of the industry’s top ten Tier 1 gold assets. Along with owning five of the top ten Tier 1 gold assets (GLD), the combined company will have two high-potential Tier 1 assets in Fourmile and Turquoise Ridge. The combined entity has a market cap of ~$23.75 billion. It will also have the largest gold reserves among its senior gold peers (GDX) (NUGT). Moreover, Barrick has the lowest total cash cost position among its peers. ## Shareholder returns Proven management should drive returns, successful exploration, cost reduction, and efficiency throughout the new company’s combined asset portfolio. In a joint letter, Thornton and Bristow said that Barrick is placed to become the world’s most valued gold mining business, saying, “We will do so by optimising our existing operations, pursuing new opportunities that meet strict investment criteria and developing them with disciplined efficiency.” Continue to Next Part Browse this series on Market Realist: * Part 2 - Will the GOLD Merger Expedite the Tanzania Dispute’s Resolution? * Part 3 - Barrick Could Emerge Leaner and Stronger after an Asset Review * Part 4 - Could the Cleanup at GOLD Lead to Increased Shareholder Returns?
As the bear market beat rolls on, investors have had to look outside of equities for strength. Indeed, gold prices have marched persistently higher over the past six weeks, breathing new life into an area that has been dead money for five years. Gold is glittering once more.
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Is Gold Ready to Fly in the New Year? Investors’ economic and earnings outlook for 2019 is getting bearish. Leading indicators are signaling a slowdown in US economic growth, and earnings’ approaching deceleration is worrying investors.