With more earnings coming down the pipe, investors looking for a buying opportunity may want to consider a gold value ETF opportunity via the Sprott Gold Miners ETF (SGDM) following the Barrick Gold Corporation (GOLD)’s earnings drop.
The gold firm saw its stock drop Thursday following a $653 million revenue miss despite beating the Zacks Consensus Estimate earnings of $0.11 per share, with the firm reporting earnings of $0.13 per share. That earnings per share surprise represents the fourth time the firm has surpassed EPS estimates over the last four earnings releases.
GOLD is one of the world’s biggest producers of gold with mines in North and South America, Africa, and Australia. In that role, it stands to benefit from a gold rebound, making it a value opportunity for investors looking to grow their gold holdings in an uncertain environment.
While rising rates may have a traditional association with a decrease in the value of gold, the evidence suggests that the relationship isn’t as strong as commonly assumed. A rising rate environment can also be one in which gold is held to avoid uncertainty whether from rates, geopolitical risk, or the specter of a looming recession.
Recent news also shows record demand for gold among central banks, lifting global demand. The U.S. dollar may be strengthening, but knock-on currency effects may feed even greater demand for gold around the world.
SGDM tracks the Solactive Gold Miners Custom Factors Index, investing in multi-cap equity firms tied to gold mining. GOLD is the second largest holding in SGDM’s portfolio, held at a 10.4% weight just behind the Newmont Corporation (NEM) at 12.3%. SGDM has seen its returns increase from -11.7% over three months to -5% over one month.
Offering exposure to GOLD at the cost of a 50 basis point fee, SGDM could be a strong value play to get into gold and stocks like GOLD as economic uncertainty has grown.
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