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« Agnico Eagle Mines Ltd: Fancy a quick bet? | Main | Kinross Gold Corporation: Update 05 August 2006 »
Monday
Aug072006

BARRICK GOLD CORP: Not for us

Stock performance is about comparison and compared to some of the mid caps Barrick Gold Corp lacks glitter.

Barrick has a Market Cap of $27 Billion, a real heavy weight in the gold mining sector. But does it punch its weight? Is big automatically beautiful? We have watched this company for some time and as an investment it is making money. But, in terms of percentage gains, the mid caps are more appealing to us.

For example, lets compare Barrick's performance over the last 12 months with Agnico Eagle and Kinross:

Barrick August 2005 $26, August 2006 $32, a 23% rise.

Agnico August 2005 $15, August 2006 $37, a 146% rise.

Kinross August 2005 $6, August 2006 $12, 100% rise.

In terms of growth 23% in 12 months is very good, but this is a gold bull market! Who knows how long it will last? We need to be positioned to ride this bull well and that means we have to choose those gold mining stocks that are capable of decent acceleration.

The purchase of NOVAGOLD RESOURCES INC may help the cause, if they get it? However, Barrick are miners who have hedged their production in the past and this strategy reduces your exposure to the movement of gold prices. As a policy we prefer to invest in unhedged mining stocks.

We will continue to observe with interest but for now we think that we can find more interesting gold plays elsewhere.




NOVAGOLD RESOURCES INC can be found under the symbol NG trading on the AMEX, and BARRICK GOLD CORP can be found under the symbol ABX, trading on the NYSE.

07 August 2006

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