Why Barrick Gold Is Well Placed To Weather A Downturn In Gold Prices
Gold prices have declined over the past couple of months, particularly after the completion of the U.S. presidential elections. Expectations of an interest rate hike by the Fed in December and a boost to economic growth as a result of President-elect Trump’s pro-business policies have dampened the investment demand for gold, negatively impacting prices of the metal. We expect gold prices to decline next year amid improving U.S. economic conditions and an environment of higher interest rates. With gold prices likely to decline next year after recovering in 2016, Barrick Gold is in much better shape to operate in an environment of subdued gold prices as compared to the situation a couple of years ago. Barrick Gold has sold off a number of non-core assets since the middle of 2013 in response to a decline in gold prices from 2013 to 2015, in order to lower its average operating costs. Though this has resulted in a decline in the company’s gold production (as reflected by the lower EBITDA figure for 2016 vis-a-vis 2014), it has helped lower the company’s all-in sustaining costs metric. The company has also made a concerted effort to lower its indebtedness and improve the efficiency of its operations. This has positioned Barrick in a much more comfortable position to weather a decline in gold prices as compared to the situation a couple of years ago, as illustrated by the following tables.
Have more questions about Barrick Gold? See the links below.
- What Is Barrick Gold’s Revenue And EBITDA Breakdown?
- What Is Barrick Gold’s Fundamental Value Based On 2015 Results?
- By What Percentage Did Barrick Gold’s Revenue & EBITDA Decline In The Last 2 Years?
- How Has Barrick Gold’s Revenue Composition Changed Over The Last 2 Years?
- How Will Barrick Gold’s Revenue Composition Change by 2020?
- Barrick Gold: A Look Back At The Year 2015
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