Why invest in gold now? The yellow metal has struggled in the past year, with gold attempting to climb over $1,900 several times. However, it fell back each time, observes Mark Skousen in his premium trading advisory service, Home Run Trader.
Maybe, it’s time for gold to shine. Technical traders have noted that September is an especially good time to buy gold. Even emerging markets guru Mark Mobius is recommending that investors put 10% of their portfolios in gold.
Huge spending, multi-trillion dollar deficits and fears that the Federal Reserve will monetize the debt by printing more money are all bullish signals for gold. And Barrick Gold is a great way to play it.
Where to invest next? I recommend Barrick Gold (GOLD). Based in Toronto, Canada, Barrick Gold is one of the world’s leading gold and copper producers, with mines and copper projects in North and South America, Africa, Papua New Guinea and Saudi Arabia.
In January 2019, Barrick merged with Randgold Resources. And in July of that year, it combined its gold mines in Nevada with those of Newmont Corporation (NEM) in a joint venture called Nevada Gold Mines.
While the majority of the venture is owned and operated by Barrick, Nevada Gold Mines is the world’s largest gold mining complex.
Barrick also owns and operates six Tier One gold mines: three in Nevada, two in Africa and one in the Dominican Republic. There are only 13 Tier One gold mines worldwide. Barrick owns nearly half of them.
The firm generates over $12.6 billion in annual revenue. In the second quarter, earnings jumped by 15%. Management is earning a healthy 12% return on equity. And the firm’s operating margin is a whopping 42%.
Despite its strong growth, Barrick Gold — at just 14 times trailing earnings — sells at less than half the valuation of the S&P 500. It also offers a bigger dividend yield. This year, it raised its dividend from $0.09 a share to $0.23 a share.
Yet, Barrick is not just a play on higher gold prices. The company projects an annual gold production of 4.5 million to 5 million ounces over the current decade. I estimate that earnings per share at Barrick will rise from $1.22 this year to over $1.75 in 2022.
In short, the company is increasing its production, growing through acquisitions and benefiting from higher gold prices. So, pick up Barrick Gold at market, and place a sell stop at $15 for protection.
