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Seeking Alpha/The Value Trend/9-2-2020
“Barrick Gold Corporation has made headline news due to its becoming the latest holding in Berkshire Hathaway’s portfolio. This has made many reconsider the role of gold and the importance of gaining exposure to the yellow metal as part of a well-balanced portfolio. Nonetheless, I believe there are many reasons to stay away from gold miners, and instead of buying gold outright. Furthermore, even if you are looking to buy some gold miners, other companies currently offer much better value in my opinion. …”
” … The idea behind investing in gold miners is to amplify the effects of increases in the gold price. However, investing in gold miners has many risks which investing in straight-up physical gold doesn’t. Investing in miners is a speculative investment, like any other investment in the stock market. When you invest in gold miners you face substantial risks regarding the uncertainty of explorations, hedging policies, environment, and even geopolitical risks. Barrick Gold is a prime example of this, with the recent political unrest in Mali threatening their production there, forcing them to sell their Morila Mine. One would think that, given the extra risk, investors would be rewarded with much higher returns than when investing in physical gold, but this is far from the truth.”
USAGOLD note: Some interesting footnotes to Berkshire Hathaway’s purchase of Barrick Gold Corporation shares ……
Chart courtesy of Seeking Alpha • • • Source: BMG Group • • • Click to enlarge
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