Why Barrick Gold & Newmont Are Must-Adds To Your Portfolio
Zacks Investment Research | Sep 29, 2016 05:39AM ET
After three lackluster years, gold has regained its shine in 2016, as reflected by a 23% rise since the beginning of the year. The unprecedented Brexit decision saw gold prices cross the $1,300 per troy ounce threshold in Jun 2016 and prices have remained above that point since.
The Brexit-induced chaos in the global markets spurred investors’ to scurry for safe havens, triggering a strong rally in gold. Moreover, gold prices have been gaining support from expectations that central banks around the world would step up monetary stimulus to avert economic damages from Brexit. The deferral of U.S. interest rate hikes has been another major factor that has aided gold’s cause this year.
Concerns about global economic growth, along with lingering economic and political uncertainties, are likely to act in favor of gold in the near to medium term. Further, gold prices are generally helped by retail demand in countries like India and China, attributable to wedding and festival seasons occurring in the later part of the year. While demand will remain solid, global production of gold is likely to decline by 3% in 2016. This imbalance could facilitate prices moving north.
MINING-GOLD Industry Price Index
MINING-GOLD Industry Price Index
The spike in gold prices has led to a surge in the share prices of many gold miners, reversing the harrowing losses incurred in the past year. Gold stocks which were out of favor last year are now being considered as solid options in today’s market.
While mid-cap gold miners like New Gold, Inc. (TO:NGD) with a Zacks Rank #1 (Strong Buy), IAMGOLD Corp. (TO:IAG) and Gold Fields Ltd. (NYSE:GFI) both carrying a Zacks Rank #2 (Buy) have witnessed a surge in their prices, the bigger mining giants continue to see high trading volumes and interest from investors.
Out of these giants, top ranked Barrick Gold Corp. (NYSE:ABX) with a market cap of $20.51 billion and close second Newmont Mining Corp. (NYSE:NEM) having a market cap of $20.42 billion have invoked the most interest as always. Their share prices have catapulted this year thanks to the rally in gold prices, placing them among the top-performing precious metals stocks. Both of these stocks currently boast a Zacks Rank #1. You can see
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