Shares of miner Barrick Mining Corporation (B 2.16%), previously known as Barrick Gold, fell 9.8% on Friday as of 12:30 p.m. EDT.
Barrick reports earnings next week, and there wasn't any company-specific news today. That means the stock's decline was likely due to the 9% drop in gold prices today as of that time.
Gold tends to be viewed as an insurance policy against high inflation and a weak dollar. The fear during the second Trump Administration is that some of his decisions could trigger instability, both geopolitically and with regards to inflation.
However, today, President Trump made a decision that allayed some of those fears. In response, investors sold their gold "insurance" after a huge 75% rally in gold prices over the past year.
NYSE: B
Key Data Points
Trump nominates Warsh for Fed Chair
One of the biggest question marks around Trump's impact on the economy was his nominee for Chairman of the Federal Reserve. President Trump has been highly critical of current Chair Jay Powell, whose term ends in May. Trump has generally thought Powell has kept interest rates too high, while Powell has noted the Fed is objectively assessing the dual risks of economic growth as well as inflation in setting short-term interest rates.
The fear among investors has been that Trump would nominate a "yes-man" to the job, one who may cut interest rates at Trump's command, even if economic data support keeping them high to tamp down inflation. Of note, both Presidents Johnson and Nixon pressured the Federal Reserve to keep interest rates low in the late 1960s and early 1970s, which some believe contributed to the high inflation of the mid-to-late 1970s and early 1980s.
However, today President Trump nominated Kevin Warsh to the Chairmanship. Among the candidates rumored to be considered, Warsh was definitely the more "mainstream" candidate, having been nominated to the Fed's Board of Governors under the George W. Bush Administration, where he served from 2006 to 2011. He also had a career on Wall Street prior to that at Morgan Stanley. Since 2011, he has been teaching at Stanford, while also serving on corporate boards.
His appointment is seen as signaling an independent Federal Reserve, allaying Wall Street's fears of a "yes man" causing an inflationary spike. As such, inflation hedges such as gold declined after a big run-up.
Image source: Getty Images.
Barrick reports next week
Barrick's earnings report is next Thursday, Feb. 5. The company is expected to benefit from rising gold prices, which have appreciated about 26% since the beginning of the fourth quarter, even after today's decline.
So, investors should expect another quarter of hefty revenue and profit gains, as virtually all of gold's price increase falls through to miners' bottom lines. Investors should also take note of any commentary on the development of Barrick's Fourmile Project, where recent studies showed it could be one of the "greatest gold discoveries this century," according to the company.
