Barrick Gold Corp (GOLD: NYSE)
Price at Preparation: $17.73 (EOD Friday Dec 1, 2023)
What they do
Barrick Gold Corporation is a Canadian-based gold and copper producer. The Company is principally engaged in the production and sale of gold and copper, as well as related activities, such as exploration and mine development. The Company has ownership interests in producing gold mines that are located in: Argentina, Canada, Cote d’Ivoire, the Democratic Republic of the Congo, the Dominican Republic, Mali, Tanzania and the United States. The Company’s operations include Nevada Gold Mines, Bulyanhulu, Hemlo, Jabal Sayid, Kibali, Loulo-Gounkoto, Lumwana, North Mara, Porgera, Pueblo Viejo, Tongon, Veladero and Zaldivar.
If you’ve missed the recent surge in gold prices, this shiny metal has soared to unprecedented heights, once again breaching the $2000 USD per ounce mark. At Theta Bandits, our eyes are locked onto this upward trajectory, focusing on a specific ticker amidst this lucrative movement. Keep in mind, there are varied routes to tap into gold, either through gold producers like today’s pick of Barrick Gold Corp or via vehicles more closely linked to the pure bullion spot price, albeit potentially more volatile. Gold is a player in the metals cycle, and our strategy is tuned to ride this cycle, securing profits at defined levels while safeguarding our capital to help minimize losses.
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Let’s chart our course, beginning with a glance at the visual aid below. Casting a glance leftward on the chart, we notice a robust foundation—a strong support line from which the price has leaped multiple times. Fast forward to the present, and we find the current price aligning with that same support/resistance line. Should the price breakthrough above the green line, history suggests a high likelihood of a repeated upward pattern. Analysts tout a 1-year average price target of $21.11, marking a robust 19% upside potential—a figure that sings sweetly to any investor’s ears.
As the price strives to breach the green support/resistance line, a confirmed breakthrough signals the starting gun for profit capture at each surpassed orange line level. Elevating stops while pocketing profits stands as a savvy strategy to maximize gains as the play unfolds. Although the 1-year target rests at the second orange line, historical stock performance hints at the potential for further ascent. The upper range of analysts’ 1-year price target, clocking in at $25.56, as depicted below, implies a cautious yet rewarding risk-to-reward strategy, advocating for a final exit near the $25.44 orange line marker.
Cutting for a Loss:
Initiating a position and witnessing the stock price turn south prompts the crucial question: how much wiggle room is advisable? Referencing our earlier diagram highlighting a sturdy bounce-off point at $14.14, if the stock breaches this level downward with no other stops in place, cutting the position at this juncture becomes prudent—take a moment to lick your wounds, reflect and gear up for the next trading opportunity.
The lure of options as an avenue to magnify gains is undeniable, yet it comes hand in hand with heightened risk. Revisit our past picks, particularly those involving covered calls. This strategy necessitates at least 100 shares per contract, a potentially capital-intensive move. Given the cyclicality of this play, employing longer-dated options with a strike just above the final target price appears as the safest approach when venturing into option selling with more advanced traders employing shorter timeframes with more aggressive targets for further profit.
The truth is that trading and risk are inseparable companions. While this plan sketches out some safety nets, trading’s inherent risk demands thorough analysis and comfort with the strategy before taking any action. Embrace the ‘paper account’ as your practice ground—where your trading skills flex and refine—before deploying your hard-earned funds into action.
Disclaimer: This article is for informational and educational purposes only, not investment advice. We recommend researching and consulting with a financial advisor before making investment decisions. All actions based on this information are at your own risk.