Barrick’s gold stock looks too cheap to ignore
Written by Joey Frenette at The Motley Fool Canada
Barrel gold (TSX: ABX) (NYSE: GOLD) is currently in the midst of a ruthless bear market. Gold prices have been lackluster, despite the recent rise in inflation. Without a doubt, cryptocurrencies such as Bitcoin, Dogecoin, and Ether made the shiny yellow metal shine a bit. While no one knows where gold is heading after its bad correction to around US $ 1,750, I think those looking for alternative assets with low correlation should look to the number of gold miners, many of whom are are trading at significant discounts from their historical ranges.
Arguably, Barrick Gold is one of the best miners to pick up if you are bullish on gold or looking to improve your portfolio’s Sharpe ratio. Over the centuries, gold has shown that it is capable of retaining its value, even during the worst economic disasters. In the coronavirus crash, gold held its own. Bitcoin didn’t. I think this proves that Bitcoin is not a great alternative to gold, although millennials probably prefer crypto over precious metals when it comes to alternative assets.
Barrick Gold stock looks intriguing after crash
Barrick’s well-run trading and its upside potential if gold rises above US $ 2,100 are not the only reasons to buy ABX shares, as they continue to add to its painful losses. The dividend has inflated accordingly and is not threatened – at least, not with gold prices above the US $ 1,400-1,600 range.
After another day of almost 1% decline on Monday, ABX stock is finally showing a 2% return, making Barrick Gold stock one of the most productive ways to invest in gold. Without a doubt, the yield could hit the 3% mark if this selloff were to intensify due to falling gold prices. Yet, pending a market collapse and inflation back below 2%, I don’t think gold is able to dive at this rate. Indeed, jumping into a name with such negative dynamics can be frightening, even reckless, for those who haven’t done their homework.
Either way, Barrick Gold stocks can be an invaluable and inexpensive way to improve your diversification. Ultimately, the decision to buy Barrick Gold shares here depends on your goal. If you’re looking to save time quickly, you might be disappointed. But if you don’t have any alternative assets and want a long-term inflation hedge, it makes sense to take Barrick and collect the dividend while you wait for the next storm to cause a rush for safe-haven assets.
The stupid bottom line
Indeed, many millennia are likely to question the suitability of gold as an investment in the Bitcoin era. Considering their very different reactions to past market spills, I would say those who love millennial gold should embrace real gold as well. Is There A Place In A Wallet For Crypto And Precious Metals? May be. I think in due course investors will realize that gold, not Bitcoin, is the gold standard for portfolio diversification.
Either way, the risk / reward scenario looks appealing to Barrick Gold, which is my favorite miner after collapsing nearly 43% from its five-year highs.
The Barrick Gold Stock post Seems Too Cheap to Ignore first appeared on The Motley Fool Canada.
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Foolish contributor Joey Frenette has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.