Why Has Barrick Gold Stock Lost 20% In Value?

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GOLD: Barrick Gold logo
GOLD
Barrick Gold

The shares of Barrick Gold Corporation (NYSE: GOLD) have lost 20% in value since mid-April as gold prices declined from $2,000/ounce in March to $1,800 at present. While other commodities, including copper and iron, have also reported a decline over concerns of lower demand due to China’s zero-tolerance policy on the pandemic, a strong U.S. dollar has been a deterrent to gold futures. The Russia-Ukraine war is causing key changes in geopolitical strategies of many countries – leading to new trade relations and energy security pacts. Thus, Trefis believes that growing uncertainties surrounding this shift is likely to propel gold prices until global macroeconomic stability is attained. Trefis highlights the historical trends in Barrick Gold’s revenues across key operating segments in an interactive dashboard analysis.

Will demand for precious metals grow in 2022 and 2023?

In 2021, Barrick Gold reported 4.4 million ounces of gold sales at an average price of $1,790/ounce. Uncertainty surrounding macroeconomic recovery coupled with high benchmark oil prices led to a surge in commodity prices – assisting the company’s top and bottom line in recent quarters. After observing a peak of $2,200/ounce in 2020, the precious metal registered a correction in recent months as the U.S. dollar strengthened. Thus, the company reported a 5% (y-o-y) topline contraction and a 20% (y-o-y) decline in operating cash flow in 2021. Per annual filings, sales of gold, copper, and other metals account for 90%, 8%, and 2% of total revenues, respectively. Per the World Bank’s commodity market outlook, gold prices are projected to decline from $1,880/ounce in 2022 to $1,650/ounce in 2023. Similarly, copper prices are projected to decline from $4.60/lb in 2021 to $4.40/lb in 2023.

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Stock has underperformed broader markets

GOLD stock declined from levels of around $21 in February 2020 (pre-crisis peak) to levels of around $16 in March 2020 (as the markets bottomed out), implying GOLD stock lost just 24% from its approximate pre-crisis peak. It observed a strong rally post the broader market sell-off and has again touched the pre-crisis level of $20 at present. In comparison, the S&P 500 Index has gained 23% in value since pre-pandemic levels.

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Returns Jun 2022
MTD [1]
2022
YTD [1]
2017-22
Total [2]
 GOLD Return 0% 8% 28%
 S&P 500 Return 0% -13% 85%
 Trefis Multi-Strategy Portfolio 1% -18% 223%

[1] Month-to-date and year-to-date as of 6/1/2022
[2] Cumulative total returns since the end of 2016

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