Most top strategists on Wall Street often present points of view that are vastly different. Some are bullish, some bearish. Some positive on the future for the economy, others decidedly negative. One thing almost all seem to agree on is, regardless of who wins the presidency in a month, the dollar will weaken. Perhaps more so under a Trump administration as he has vowed to renegotiate our trade agreements, but under a Clinton administration as well.
Commodities such as precious metals tend to do well in weaker dollar markets, and while gold has traded higher over the past year, a substantial drop in the dollar has some saying that the $1,500 an ounce level is not out of the question. A new research report from Deutsche Bank says it is time to increase precious metal exposure, and it has three top gold picks. With Tuesday’s massive sell-off in gold, the time to add shares looks even better
This is one of the top stocks in the sector and has had a nice run off the lows, but it is way down from highs printed five years ago. Barrick Gold Corp. (NYSE: ABX) produces and sells gold and copper. The company is also involved in exploration and mine development activities in various countries, including the United States, Canada, Australia, Argentina, Chile, Peru, the Dominican Republic, Papua New Guinea, Tanzania, Zambia, and Saudi Arabia.
Barrick’s principal properties include the Cortez, Goldstrike, Pueblo Viejo, Lagunas Norte, Veladero, Zaldívar and Lumwana mines, and its Pascua-Lama project. As of December 31, 2014, the company had proven and probable mineral reserves of 93.0 million ounces of gold and 9.6 billion pounds of copper.
Deutsche Bank has pointed out in the past that Barrick is the world’s largest gold mining company, it also has exposure to copper and silver and it holds interests in a nickel project in the Democratic Republic of Congo. Last year the company slashed the dividend and continues on a strong cost-cutting course that includes the sale of its Australian Cowal gold mine for $550 million to the Australia-based Evolution Mining. The company generated $471 million in free cash flow (FCF) in 2015, its first positive FCF in the past four years.
Barrick investors receive a 0.5% dividend. The Deutsche Bank price target for the stock is $22, and the stock was lifted to Buy from Hold and is the top pick. The Wall Street consensus target price is $23.21. Shares closed most recently at $15.45, down over 11% on the day.