As one of the top-tier precious metal miners, Barrick Gold (GOLD) seems like a solid investment at first glance. The stock exhibits strong financial performance; EBITDA rose 30% last quarter, gold production is increasing while key projects like Pueblo Viejo advance ahead of schedule. While circumstances are indeed picking up for GOLD stock, the relative underperformance compared to gold itself is rather conspicuous. With gold working its way back into investor considerations, the sector stands a good chance of being the ultimate winner. Given Barrick’s business metrics, investors are well-positioned to take advantage of gold’s resurgence. So far this year, GOLD stock is up 25%.
Market conditions favor buying the metal via exchange-traded funds like the SPDR Gold Shares ETF or physical bullion products. Indeed, the GLD ETF has been up almost 38% in the past 52 weeks, which is practically identical to the performance of the gold contract price at Comex. In contrast, GOLD stock has been up 20% during the same period.
Much of the reason gold miners have underperformed their underlying product has to do with pragmatic economic realities. Indeed, recessionary market conditions can lift gold demand as investors rush to protect their wealth against the ravages of depreciation and inflation. However, the headwind associated with trade wars affects all businesses, including gold miners. The theory is that as the gold price rises, the benefits of exposure to the safe-haven asset will overcome the negatives. Therefore, it’s possible that miners could eventually outperform the metal, making me bullish on GOLD stock.
Strong Fundamentals Bolster the Bullish Case for GOLD Stock
Investors don’t need to overcomplicate the long-term narrative of GOLD stock. In my opinion, the narrative is straightforward. Economic conditions are at significant risk of worsening before they improve, so market participants may want to consider high-quality mining enterprises.
Currently, GOLD stock trades for 2.54x its trailing 12-month (TTM) sales. That’s a decent valuation, considering that the sales multiple landed at 2.56x one year ago. Moreover, analysts are optimistic about continued growth in the years ahead. For FY2025, Wall Street’s experts believe that Barrick will post sales of $13.8 billion – up roughly 7% from the prior year. For FY2026, analysts target a top line of $15.62 billion, up 13.4% from projected 2025 sales. From a forward valuation perspective, GOLD stock may be undervalued.
At the same time, gold ETFs are witnessing massive inflows. With demand accelerating rapidly, the extra revenue generated from the higher gold price may overcome the negative factors holding the mining complex down. As such, it may only be a matter of time before GOLD stock skyrockets, eventually exceeding the performance of the namesake asset.
Two Basic Approaches Available for Barrick Gold
For those who are optimistic about GOLD stock, there are two basic approaches to consider. The easiest, of course, is to simply buy the security itself. However, buying call options can dramatically boost returns for speculators who seek an extra kick.
Let’s assume that you anticipate GOLD stock storming to $25 per share, which is a psychologically significant milestone and a prior high. One idea is to buy the $20 out-of-the-money (OTM) call for the options chain expiring Sept. 19, 2025. The ask or premium at the time of writing is $1.48 (or $148 when applying the option multiplier).
Under this approach, GOLD stock must rise to the strike price plus the premium to break even. That comes to $20.26 using Friday’s closing price of $18.78. Buying the September call could be lucrative if you’re confident that GOLD could exceed this level before expiration.
Another approach is to think short-term with a bull call spread. Let’s assume that you believe GOLD stock will rise to $20 in one month. You could buy the 18/20 bull spread for the options chain expiring April 17.
In the above transaction, you buy the $18 call (at a time-of-writing ask of $130) and simultaneously sell the $20 call (at a bid of $35). The credit received from the short call partially offsets the debit paid for the long call, leading to a cash outlay of $95. Should GOLD stock rise to or above the short call strike price at expiration, you can collect the maximum reward of $105.
To be sure, the bull spread caps the reward at $105, meaning that even if GOLD stock rises well beyond $20, the trader doesn’t receive any extra profit from the move. However, the cash outlay is significantly reduced, making the strategy attractive for advanced speculators.
Is Barrick Gold a Good Stock to Buy?
On Wall Street, GOLD stock carries a Strong Buy consensus rating based on 10 Buy, three Hold, and zero Sell ratings over the past three months. GOLD’s average price target of $22.86 per share implies almost 20% upside potential over the next twelve months.
Barrick Gold Offers Derisked Exposure to Precious Metals
Barrick Gold presents an intriguing opportunity as rising gold prices could eventually lift the mining sector, even though miners have lagged behind the metal itself. With strong fundamentals and bullish revenue projections, GOLD stock may be undervalued, especially if demand for gold continues accelerating. Buying the stock outright offers a straightforward approach for those looking to capitalize, while options strategies like call purchases or bull call spread provide leveraged exposure. Given the potential for miners to catch up, GOLD stock presents a compelling case for bullish traders.
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