This Gold Producer Aims at being the World’s Most Valued and its Chart Pattern Suggests It Might
Barrick Gold (GOLD) is one of the largest gold producers in the world and at a time when gold prices are getting a list from dollar devaluation, it makes sense for producers to look to ramp up production and efficiency. Last week, they received an upgraded price target from Deutsche Bank to $25, which is over 25% higher than where it is currently trading.
GOLD has also discussed their desire of becoming the “world’s most valued gold producer,” and has recently entered into a joint venture with the world’s largest gold mining company Newmont Corp (NEM). The venture involves their Nevada gold mines where they see tremendous growth potential.
GOLD has been leading the performance of the futures price of gold since its March 16, 2020 and has outperformed its industry, measured by the VanEck Vectors Gold Miners ETF (GDX), pretty significantly year-to-date. As you consider potential companies to consider as a play on rising gold prices, it’s significant to find a company outpacing the price of the underlying metal and its industry.
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GOLD has also completed a bull flag formation with Thursday’s breakout on higher volume. The flagpole portion of the pattern occurred during the rally from its March 19 low near $14. Over the past week the price has been consolidating in a downward-sloping channel before today’s breakout of that channel.
The near-term target for GOLD is to retest the February high near $22.50, but the possibility of gold price moving to its all-time high and beyond places gold miners in a favorable position for substantial moves.
Option traders may want to play into that potential by considering the 18 SEP 20 24/30 long call vertical for around $0.90 or less. This provides a maximum profit potential of $510 a contract or 566% if GOLD closes above $30 by expiration. Consider closing early if the spread can be sold for $4 or more.