Commodities & Metals

Huge Gold ETF Has Added 32 Tons: Rally Looks to Resume

Barrick Gold holds a 50% interest in the Veladero mine located in the San Juan Province of Argentina; 50% interest in the KCGM, a gold mine located in Australia; 95% interest in Porgera, a gold mine located in Papua New Guinea; 50% interest in the Zalda­var, a copper mine located in Chile; and 50% interest in the Jabal Sayid, a copper mine located in Saudi Arabia.

Barrick also owns gold mines and exploration properties in Africa and gold projects located in South America and North America. It also has a strategic cooperation agreement with Shandong Gold Group.

Second-quarter earnings beat consensus estimates, and the quarterly dividend was hiked 14% to $0.08 a share. Barrick Gold maintained 2020 guidance of 4.6 million to 5.0 million ounces and guided second-half gold output to be in line with the first half of 2.4 million ounces.

After the recent dividend increase, Barrick Gold stock investors receive a 1.13% yield. The $36 BofA Securities price target compares with the $33.06 consensus target and Thursday’s close at $28.77.

Kirkland Lake Gold

This off-the-radar company offers investors very solid upside potential. Kirkland Lake Gold Ltd. (NYSE: KL) is a Canadian domiciled gold producer with three cornerstone operating mines located in Canada and Australia: Detour Lake, Fosterville and Macassa. It also owns and operates the Holt Complex, which includes three wholly owned mines and several assets in the Northern Territory of Australia.

In 2019, the company produced 974,615 ounces of gold at operating cash cost and all-in sustaining cost of $284 and $564 an ounce. That compares nicely with the current spot price of $1,900.

Its most recent earnings beat was due to lower taxes and depreciation. For 2020, Kirkland maintained its operating guidance pointing to higher gold output in the second half of 2020 and costs that were better than plan. The analysts feel the company is trading at a sizable discount to the peer gold producers, a level too excessive given its low costs and capital allocation.

Shareholders receive a 1.02% dividend. BofA Securities have set a large $64.75 price target. No consensus target was available, but Tuesday’s close was $49.02 per share.

Wheaton Precious Metals

This precious metals royalty stock makes good sense for more conservative accounts looking to have exposure to the sector. Wheaton Precious Metals Corp. (NYSE: WPM) is a Canadian precious metals streaming company with approximately 60% of its revenues from the sale of silver and 40% from gold.

Under the terms of long-term contracts, the company purchases silver and gold from a variety of mines, including Goldcorp’s Penasquito mine in Mexico, Vale’s Salobo mine in Brazil, the Lundin Mining Zinkgruvan mine in Sweden, and Glencore’s Antamina and Yauliyacu mines in Peru, then sells the silver and gold into the open market.

Shareholders receive a 0.80% dividend. The BofA Securities price target is a whopping $64.50. The consensus target is set $57.31, and Wheaton Precious Metals stock closed at $49.99 on Tuesday.

Proper asset allocation should always include at least a single-digit percentage holding of precious metals like gold and silver. Not only do they hedge inflation over the long term, but they can really help if the market does go into correction or bear market mode, as they tend to trade inverse to markets.