22. December 2020 | 07:50 CET
Barrick Gold, Blackrock Gold, AngloGold Ashanti: Gold shares for every type of investor
Whenever central banks and governments open the money floodgates, it's a positive signal for the gold price. After the initial reactions to the pandemic in March and April, the prices of gold companies went steeply upwards. Shares of many smaller companies in particular multiplied between April and August. Since then, the market has entered a consolidation phase. This phase could be an opportunity for investors - after all, the prices of gold shares, in particular, have fallen back, in some cases, significantly. At the same time, the pandemic is spreading, and governments and central banks are in a certain path dependency: to deny support to the economy now on the home stretch seems unlikely and also counterproductive given the aid already provided. Gold and companies involved in gold production should, therefore continue to have good prospects.
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ISIN: CA09258M1014 , CA0679011084 , ZAE000043485
Barrick Gold: Where to put the free cash flow?
One Company that first comes to mind for many retail investors with a focus on gold is Barrick Gold. The world's largest gold producer is benefiting directly from the rise in gold prices in recent months. The Company recently increased its sales and is growing in all areas and regions. This growth would be an excellent sign for investors if it were not for the declining profit, which fell by about one third after nine months of the fiscal year. Nevertheless, the positive news outweighs the negative at Barrick: Cash flow continues to rise, and management recently took this as an opportunity to raise the dividend. Given the increased share price, however, the dividend yield is relatively meager at around 1%.
Barrick Gold has announced that it will continue to invest its free cash in promising gold projects in the future. While due diligence on gold projects has come to a virtual standstill in light of travel restrictions, Barrick intends to meet the challenges and is looking to the future. For Barrick, this includes a sustainability strategy, which is also becoming increasingly crucial for commodity companies. Barrick Gold's stock returned just under 20% last year. While that's not outstanding, the stock remains a concrete way to profit from the price of gold.
Blackrock Gold and the end of price lethargy
The Blackrock Gold share shows that gold shares can be much more spectacular. What the shares of Barrick Gold did in one year, the little Canadian explorer put on the floor in the past week alone. The Company recently published positive drill results. In the process, the Company expanded its Tonopah West property by 480 meters to the east. At the same time, the gold and silver grades were convincing and suggest possible economic mining. The project is located in Nevada in the middle of a historic mining district for precious metals.
Since August, when the share scratched the EUR 1.0 mark in Germany, it has fallen back significantly and reached a low of EUR 0.40. Only the latest results pushed the share back above the EUR 0.50 mark. Blackrock is currently operating three drilling rigs and plans to drill a total of 30,000 meters to be able to determine the prospects of its project even more clearly. The goal is to sell the property profitably to a major producer. There is undoubtedly still a long way to go until then, but the Company is confident given the quality of its property and its location in the US state of Nevada. Especially for speculative investors, the stock could be worth considering.
AngloGold Ashanti and the cost problem
The AngloGold Ashanti share shows that trees do not grow to the sky, even for gold companies: over one year, investors were only able to achieve a return of just under 7%. The problem of South Africa is the costs. AngloGold Ashanti has recently divested itself of some projects and is fine-tuning its profitability. To this end, promising mines are to be further expanded in addition to the sale of poor projects. The rising gold price came at the right time for the South African Company: On the one hand, it took the pressure off costs and made it easier to sell projects, and on the other hand, it made it easier to invest in the future.
Tailor-made solutions for every type of investor
Although the share has lost more than a third since August, the stock could quickly get back on track. In addition to positive water level reports from the restructuring, a rising gold price would also help. Among the major gold producers, AngloGold Ashanti is certainly one of the more speculative stocks. Whether it is the conservative Barrick Gold, the restructuring case of AngloGold Ashanti or the up-and-coming small cap Blackrock Gold, investors can access gold stocks depending on their return requirements and risk profile, and thus create tailor-made portfolio solutions. The outlook for the gold market is positive.