Barrick Mining Corporation (B 2.98%) stock tumbled for the third day in a row Thursday, falling 6.7% through 2 p.m. ET -- and it's no great mystery why.
Gold prices collapsed 5.6% today, falling to $4,614 per ounce, and silver prices fell even harder, down 7.8% to $71.41 per ounce.
Image source: Getty Images.
Gold and silver prices fall
Gold prices have been declining for nine straight days now, as investors worry that the rising price of oil will fuel inflation and drive investors away from investing in gold (which does not pay interest) and into bonds instead (which do pay interest). After reaching a recent high of $5,242 on March 10, gold prices have slid about 11.5% -- but Barrick is down 18.3%. Does that make sense?
It actually sort of does, once you notice that silver prices are down even more than Barrick's stock price -- and recall that Barrick mines both gold and silver. Since topping $89.59 on March 10, silver's price is down 20.3% per ounce.
So basically, Barrick's stock price is becoming more closely tied to silver than to gold -- it's being treated like a silver stock, not a gold stock.
NYSE: B
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Is Barrick stock cheap?
The good news for investors is that all this selling has forced Barrick stock down to very attractive levels. Priced today at just 13.8 times earnings, the stock looks cheap. (Barrick also pays an attractive dividend yield of 4.2%.)
Adding to the attraction, analysts don't expect the current weakness in gold and silver prices to last. Expectations for rising gold and silver prices have Barrick stock priced at barely 10 times next year's earnings.
If you think, as I do, that precious metals prices are heading higher long-term, Barrick stock is worth a good hard look right now.
