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Barrick Gold chairman Peter Munk speaks at the company's annual general meeting in Toronto on Wednesday May 2, 2012. (Chris Young/THE CANADIAN PRESS)
Barrick Gold chairman Peter Munk speaks at the company's annual general meeting in Toronto on Wednesday May 2, 2012. (Chris Young/THE CANADIAN PRESS)

Schizas’ Mailbag

Barrick Gold finally looks like a buy Add to ...

Hi Lou,

Barrick has had quite a bounce from its lows. It seems to be settling into an upward trend. Is there still some momentum here or has this gone up too much, too fast?

Thanks,

Brett

Hey Brett,

Thanks for the assignment.

This will be the second time that I inspect the case for Barrick Gold Corporation. The last time was on Feb. 25, 2013 on an assignment from Kurban. The stock was trading for $31.12 and he wanted to know if it was a good idea to buy.

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The research conducted on his behalf indicated that the shares were meeting resistance along the 50- and 200-day moving averages. It was advised that if support at $30.00 didn’t hold there could be a retest of support at $20.00. Finally it was noted that the RSI and the MACD were not supporting a buy. Kurban was cautioned that if he was bound and determined to buy he should take a small position and add to it on an advance. The shares continued to decline hitting a 52– week low of $14.22 in early July of 2013.

Another run at the charts will help surface the risks and opportunities associated with this investment.

The three-year chart does indicate that we are seeing a breach of the downtrend line that dominated the chart going back to early 2012 when the shares traded near $47.50. Also worth noting is the golden cross that formed in February of 2014 suggesting that this move off the lows has more lift in it. The move through resistance along the 50- and 200-day moving averages also puts the advance in a positive light.

The six-month chart illustrates the buy signal generated by both the MACD and the RSI in December when the stock bounced off of $16.50. From the research conducted it appears that the shares could easily make their way to $30.00 before meeting any serious resistance. At this point I would say that ABX presents a buying opportunity. As I advised Kurban, take a position and add to it as the stock advances.

Make it a profitable day and happy capitalism!

Have your own question for Lou? Send it in to lou@happycapitalism.com.

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