Gold is going lower in our view, but Barrick (ABX, quote) may have near term upside as we see the following catalysts: 

  1. Image courtesy Bullion Vault:'s trend lower is not a straight line and we are $5-10/oz above key level of support where we think gold can bounce 
  2. Barrick technically is well supported between $17.00-$17.50 
  3. The merger discussions with Newmont were a concern for Barrick shareholders as it was dilutive to EPS, the combined entity would have higher cash costs and there would be inevitable management synergy issues.

Risk reward on Barrickc has $16.00 as downside and $20.00 as upside target.  In this environment we are targeting a 6-8 week horizon the trade.

Barrack earnings and AGM on April 30th may provide a greater catalyst to upside as they announce plans for asset divestitures and give guidance on 2014 production targets.

The Street has an average 12m price target in Barrick of $22.30 share.


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