The entire gold sector caused huge value destruction for shareholders over the last two years with near gradual declines in share prices. Barrick Gold lost 61% of its market capitalization, Goldcorp (GG) lost 46%, Anglogold Ashanti (AU) 68% and Newmont Mining (NEM) 57%
Barrick Gold Corporation (USA)
(Public, NYSE:ABX) Watch this stock
More prosperous societies in Asia, above-average growth in emerging markets and global, long-term GDP growth are likely to support gold prices. Actions taken by the FED to extract liquidity out of the market will be implemented because the economy grows and does not need to be on artificial life support anymore. A growing economy is characterized by increasing inflationary pressures which should also support long-term gold price appreciation as commodities are sought out for their inflation hedging properties. Short-term governance or operational issues at Barrick Gold are manageable. Barrick also takes the right steps and divests non-core assets to improve free cash flow. Given the extremely depressed valuation of Barrick Gold, anti-cyclical investors with patience could get a serious bargain here. If Barrick Gold just manages to trade at the peer group average of 13.58 the shares have 68% upside potential. Long-term Buy.