Barrick Gold Corporation (USA) (NYSE:ABX): The Time To Buy Or Time To Sell

Boston, MA, 03/25/2014  (usastockreports) – Analysts at Credit Suisse have maintained their ratings on Barrick Gold Corporation (USA) (NYSE:ABX) as “Neutral”. Although they didn’t made any changes in the rating but are more optimistic about the company’s performance in the coming time. They have raised the share price target of ABX to US$21. They state that the reason behind the rise in share price is the conservative approach taken by Barrick God for its gold price assumption for reserves. It stands at $1,100/oz. The other reasons are the higher chances to optimize the exploration within its asset base and higher forecast in operating cash flows.

Change in economy

In the last one year Barrick Gold Corporation (USA) (NYSE:ABX) has stayed an under performer in the metals and mining industry. One of the reasons why the company is seeing the fall in revenues and the stock is performing poorly is the fall in gold prices. Gold has always stayed an invaluable asset and is considered as a safe haven in turbulent economic times. During the economic down turn when the stock prices fall then the people rush to invest in gold. The reason is simple. The stocks are backed by the dollar.

But now when in the last few months it is confirmed regularly in the FOMC meetings that the economy is improving then it has become necessary to evaluate the share prices of gold mining companies from new perspective. In the last FOMC meet headed by Janet Yellen the tone was clearly hawkish. It was reaffirmed that the poor weather conditions led to sluggish economic reports. There was also a hint of interest rate hikes sooner than the planned time.

Impact

Gold had a negative correlation with stocks and the value of the dollar. In such a scenario where economy is improving and the stock market is trading at its all time high, the interest of the investors coming back to the metals and mining sectors looks dim. The silver lining here is the company has shown good growth in earnings in last quarter.

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