Barrick Gold: A 33% Return With More Upside Ahead…

| October 30, 2013 | 0 Comments

gold minersBack in early July, I let you in on a little secret about Barrick Gold (ABX).  As you may remember, I pointed out two factors pointing to an imminent rally for the Canada-based mining company.

Not only was the company trading significantly below book value, but it was also presenting a highly bullish technical pattern.  At the time of the article, ABX was trading for a mere $15.

Look at where shares are now…

  Barrick Gold

As you can see, ABX is pressing multi-month highs at $20… a solid 33% gain in just under four months.

Is it time to sell your shares for a profit?

Not yet…

Even though the company’s value metrics aren’t quite as attractive as they were in July, ABX still has plenty of reasons to run higher. 

First of all, the stock is on the verge of breaking a very important technical resistance area between $20 and $22 (blue line).  

And if you look closely, the technical formation I pointed out in July is progressing into an inverse head and shoulders pattern.  Ask any technical analyst and they’ll tell you this promising development increases the odds of continued upside for ABX.

But that’s just the start of it…

Another factor likely to light a fire under ABX is the price of gold.  In case you haven’t noticed, the yellow metal is getting a considerable increase in buying interest lately. 

As a matter of fact, gold has rallied $75 an ounce since October 15th

What’s sending the metal higher?

Federal Reserve Chairman Ben Bernanke is widely expected to delay his much-ballyhooed tapering program.  As a matter of fact, 40% of economists polled by CNBC now see the Fed’s bond purchasing program lasting through most of 2014.

And that’s not all…

Current Vice Chair of the Federal Reserve, Janet Yellen, will replace Bernanke in January 2014.  In yet another CNBC poll, 59% of economists see Yellen being even more dovish than Bernanke.

Folks, these new developments mean the odds of the Fed cutting down on US economic stimulus are getting weaker by the day.

Bottom line…

After a dismal first half of the year, the backdrop for owning gold is getting stronger.  As a result, bulls will have a fundamental reason to push ABX higher in coming months. 

Mix that with the bullish technical pattern you see above and this gold miner has profit written all over it!

Until Next Time,

Justin Bennett

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Category: Gold, Precious Metals

About the Author ()

Justin Bennett is the editor of Commodity ETF Alert, an investment advisory focused on profiting from the ebb and flow of important commodities via ETFs. The commodity veteran and options specialist is also a regular contributor to the Dynamic Wealth Report. Every week, Justin shares his thoughts with our readers on a variety of commodity-related topics. Justin is also a frequent contributor to Commodity Trading Research’s free daily e-letter. And he’s the editor of another highly successful and popular investment advisory, the Options Profit Pipeline.