Is Barrick Gold Corporation (GOLD) stock a good buy? • Benzinga
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Despite the dramatic and surprising recovery in the equity sector, many investors still feel uncomfortable about the growing disconnect between Wall Street and Main Street. Typically, in times of upheaval or uncertainty, those affected have sought protection for gold and other precious metals. However, owning physical gold is not necessarily practical. For a mix of upside potential and contextual stability, you may want to consider Barrick Gold Corporation (NYSE: GOLD).
Barrick last month announced its preliminary results for fiscal 2020, producing 4.8 million ounces of gold, right in the middle of the forecast, which called for 4.6 to 5 million ounces. In addition, the mining company produced 457 million pounds of copper, a tally that was in the guided range – between 440 million and 500 million pounds.
How to buy gold stocks
If you want to know how to buy stocks right now, shares of Barrick Gold Corporation have arguably never been more relevant and urgent. On the one hand, although the yellow metal has not had a brilliant start to the year, the spot price of gold is currently above $ 1,800, reflecting strong demand.
Equally critical, there are many questions surrounding the ability of the Biden administration to navigate both the response to the US pandemic and the troubled economy. More than likely, the federal government must deliver an unprecedented scale of fiscal and monetary stimulus. Such measures create an inflationary effect, which will be very positive for the underlying asset of the GOLD share.
First of all, you need to follow a few steps.
- Choose a brokerage.
While the mining industry has been around for ages, that doesn’t mean your method of buying and selling stocks has to be archaic as well. Thanks to cutting-edge digitization technologies, you have multiple options when it comes to online brokerage.
When looking to hire the best brokers, keep in mind that what works for you may not be ideal for others. For example, virtually all online brokerage firms advertise commission-free transactions. However, not all platforms offer comprehensive educational material.
You may prefer an always accessible customer service interface or have the option of consulting a financial advisor. In these cases, the convenience of mobile trading apps may not be worth the myriad of services offered by traditional brokers.
Only you can decide which platform best suits your needs. See a list of your possible choices here:
- Decide how many shares you want.
Although the learning curve required to initiate your first order of actions is shallow, you must first familiarize yourself with the basic concepts. Importantly, market transactions are done via the number of stocks you want to buy (or sell), not the dollar amount.
To convert dollars to stocks for a stock acquisition, simply divide the dollar amount you want to buy divided by the market price of the target stock. For example, if you want to buy $ 1,000 of GOLD shares at its current market price of $ 22.33, you will be able to buy 44 whole shares ($ 1,000 / $ 22.33 = 44.78).
Some brokerage firms allow you to buy fractional shares, which means you can buy $ 1,000 of GOLD shares instead of $ 982.52 (44 x $ 22.33 = $ 982.52) . However, since this is not a standardized feature, not all brokerage firms facilitate fractional share ownership.
- Choose your order type.
Because a stock typically fluctuates in value during a market session, you can’t just buy stocks at a fixed price. Instead, you have different types of orders, which along with basic investing terminology are explained below.
Offer: Supply is the highest price a buyer will pay for a stock and is always lower than demand.
Ask: In contrast, demand is the minimum price that a seller will accept and is always higher than supply.
Disseminate: The spread is the difference between the bid price and the ask price. You make money by speculating or believing that the target stock’s value will increase. Market makers make their money by the difference between the purchase price of their shares and the price at which they sell the shares to you.
Limited order: A limit order is a specific price at which you want to buy or sell a stock. The transaction will only take place below your fixed price, which is an advantage of transparency. However, the downside is that there is no guarantee that the stock will reach this price.
Market order: A market order is a request to buy or sell a stock at the next available price. If you place a market order during normal session hours, it will be executed. On the other hand, your buy order will occur at the ask price (and your sell order at the bid price), making those requests less favorable for you.
Stop-loss order: If you think your target stock is going to fall in value, you can set a specific price to get out of your holdings. This way you get something out of your investment instead of losing money. However, if the stock price drops between sessions, you may end up selling your holdings for a much lower price than you want.
Stop-limit order: This can avoid the unpleasant surprises that the gap-down session can generate on stop-loss orders. Rather than selling directly when a stock falls below a specified price, a stop-limit order will only execute at the specified price and never below it. If a mini rally occurs as a result of a steep gap-down session, a stop-limit order may be triggered if the rally rally hits your price threshold. Of course, the downside is that the stock may never reach your specified price, making the stop loss order the more favorable choice.
- Run your trade.
To buy GOLD stocks at the best rate, use a limit order. It will run at the price you want and give you maximum transparency.
However, the risk is that if the session progresses quickly, you may want to place a market order. You will not receive the cheapest price, but it does ensure that you will acquire stock as the order is placed within normal session hours.
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History of the OR share
During the precious metals rally that began in the early 2000s and ended in 2011, the GOLD stock latched onto a wild ride that saw stocks go from low teens to near $ 45 on average in the first quarter of 2011. But from then until 2015, GOLD collapsed when the metal complex bubble burst.
However, GOLD stock appears to have bottomed out in Q3 2015. While the recovery that followed was not always clear, recent concerns about economic stability could lead stocks to another big rally.
Benefits of buying GOLD shares
Historically, very few investments perform well during times of uncertainty than precious metals. Check out these other benefits:
- Advantage of Fear Trade: You may be able to mount a potential rally for gold.
- Convenience factor: While you can buy physical precious metals, this process is both inconvenient and presents theft dangers. You can get exposure to gold prices while enjoying the administrative peace of mind of share ownership with an investment in a mining company.
- Incentive interest rate: The real interest rate – the benchmark rate against inflation – is actually negative. This odd circumstance penalizes holding cash, which can stimulate demand for inflation-friendly mining stocks like Barrick Gold.
Disadvantages of Buying Gold Shares
On the flip side, you might want to avoid mining stocks for other reasons:
- Volatility risk: Typically, mining stocks have a reputation for volatility. While large gold companies like Barrick are more stable than smaller mining companies, you don’t want to ignore this risk.
- Perhaps playing with insignificance: The rise of alternative safe havens like cryptocurrencies could make gold-based investments less relevant than they once were.
- History is not guaranteed to repeat itself: While it is tempting to dive into the safety of gold amid uncertainty, this historic safe-haven performance is not guaranteed to be repeated in the future.
Several indicators suggest that fear trading will increase the prices of precious metals. More recently, the Ministry of Labor revealed that the economy created just 49,000 jobs in January, few of which came from the private sector. The number of people who have lost their permanent jobs also remains worrying, at 3.5 million.
Finally, the benchmark interest rate, although it rose from last year’s low, is still down near its all-time low. This is inflationary, especially for investments based on precious metals, which bodes very well for GOLD stocks.
Investors look to precious metals for their security. However, GOLD stock provides exposure to this market while providing the convenience of online trading.
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