Barrick Gold Corp. (NYSE: ABX)
Barrick Gold has had an interesting time in the market as of late. However, today, the price of the stock is headed upward, and for two very good reasons. First off, the Bank of Japan just unveiled their economic stimulus plans. Also, investors are awaiting word from the Federal Reserve, and they’re expecting good news. Today, we’ll talk about both of these stories, what we’re seeing from ABX, and what we can expect to see from the stock in the future.
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Bank Of Japan Provides ABX A Bit Of A Boost
Japan’s economy has had a rough time as of late. However, following a recent election, hopes that things would change ran high. Today, we’re seeing the first step in the change, and it is proving to be a good thing for Barrick Gold. Essentially, Japan is making an attempt at steepening the yield curve.
At the moment, short-term and long-term yields are very close to each other in the country. As a result, banks have little incentive to make long-term loans. Unfortunately, that’s weighing on the economy in the country. So, Japan is going to take quantitative easing to the next level. Through massive scale bond buying, they should be able to push the 10-year bond yield upward. Mike Bird at The Wall Street Journal did a great job of explaining what the country is doing. To read his column, click here.
While this may seem as though it has nothing to do with ABX, the truth is that it was a key move. At the end of the day, the Bank of Japan’s stimulus plans are relatively weak, and safe-haven demand will likely persist when it comes to gold. So, all in all, investors are happy about the news.
The Federal Reserve Is The Bigger Story
While the Bank of Japan is helping ABX find some gains in the market today, the bigger story that will likely lead to massive movement is the Federal Reserve. At the moment, the Federal Reserve is in the midst of a meeting. At this meeting, they are discussing interest rates, and their plans to increase them. Recently, gold has had a rough time as a result of the idea that the Fed would increase its rate in September. If this does happen it’s going to happen at this meeting.
However, it’s clear that worries with regard to a higher rate are starting to fade, and that’s good news for Barrick Gold. At the end of the day, while economic conditions seem to be improving, the mixed bag of economic data that we’ve received this month suggests that now is not the time to raise rates. So, this is helping to push the price of gold higher, as investors anticipate the news from the Fed. As we know, when gold goes up, ABX follows.
What We’re Seeing In the Market
As investors, we know that the news moves the market. Recent economic news seems to be good for gold. So naturally, the news is also good for ABX. As a result, we’re seeing gains in the value of the stock today. Currently (1:19), the stock is trading at $17.79 per share after a gain of $0.59 per share (3.43%) thus far today.
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What We Can Expect To See Moving Forward
Moving forward, I have a relatively bullish opinion of what we can expect to see from Barrick Gold. At the end of the day, the company is focused on a precious metal that is in high demand at the moment. Given the current state of the global economy, I’m expecting to see a continuation of this demand. All in all, this should lead to gains ahead.
[Image Courtesy of Wikipedia]