Barrick Gold Review

Barrick Gold is one of the largest mining companies in the world. Headquartered in Canada, the company has been in operation for 38 years. It has more than 18,000 employees. Shares are publicly traded on the stock market, which means that you can own a portion of the company and gain a small amount of the profits.

What do you need to know about Barrick Gold before you invest? Its profits are largely tied to the price of precious metals, yes, but there are other factors too. How does the company stand up to the competition? And are they prepared for any potential problems with their mines?

We've taken a look at what you should know prior to making an investment decision.

About Barrick Gold

The Barrick Gold Corporation has headquarters in Toronto, Canada. Since being established over 35 years ago, it has grown to encompass operations across 13 countries. As of writing, there are 13 mines in operation. Most competing mining companies have only a fraction that many mines.

The company's profits are largely tied into the prices of precious metals. As precious metals increase in value, the company earns more for its production. The profits are also affected by how much the mines are yielding, as well as whether there are any external factors that make the mines unviable.

At the end of 2019, Barrick Gold had more than 70 million ounces of gold reserves, valuing billions of dollars. The company has also performed extremely well for its shareholders. They have either met or exceeded the expectations of market analysts for almost three consecutive years.

For a while, this was the largest gold miner in the entire world. But the company was knocked off its pedestal when two large competitors, Newmont and Goldcorp, merged back in 2019.

The company's stocks are currently traded on the Toronto Stock Exchange. The company CEO has stated that he is interested in moving the listings to the New York Stock Exchange, since this has more traffic and will let more investors have the option to buy in.

Huge Investors

Barrick made headlines when it became the recipient of a few huge investments from executives who had previously claimed not to trust the gold market. The company Berkshire Hathaway bought more than $500 million in shares in 2020, which totaled to a little over 1% of the company's total stock.

This was shocking to the investment community because of who runs Berkshire Hathaway. The CEO is investor Warren Buffett, who notoriously stated that gold was an ill-advised investment. His business partner said the same. Their previous philosophy was that it was more important for assets to pay dividends than to be stable.

Warren Buffett explained his decision by saying that the precious metals market was a more compelling investment during these turbulent economic times. He also stated that he had purchased stock in a company rather than purchasing precious metals themselves, because he still believed that dividends were better than a safe investment gathering dust.

Later on, Warren Buffett sold all of his shares in the company. This coincided with the time that precious metals started to decline after reaching all-time highs during the COVID-19 pandemic. It's possible that Warren Buffett just predicted that the market would shift like this and maximized his investment while he could.

Environmental Impact

Environmental impact is a huge concern for corporations all over the globe. That's especially true for precious metals miners. Barrick Gold is extracting non-renewable resources from the earth. Without the right care taken to their management, they could become the target of climate activists.

Fortunately, it does seem that Barrick Gold is doing its best to curb its environmental impact. Of course, there will always be some permanent impact when removing non-renewable metals.

They have been transparent when reporting their global carbon footprint. There is also a goal of reducing the company's greenhouse gases by 30% over time. As of 2050, the company is projected to have net-zero carbon emissions.

That isn't the end, either. In the mines located in the US, Barrick is working to transition to solar power and natural gas instead of using coal. Coal power is notoriously terrible for both the environment and for human health.

Barrick is just one of many mining companies that has been pressured to address its environmental impact by climate activists. Since environmental consciousness is a big concern for consumers these days, it's in the company's best interests to implement these changes.

Mining companies are especially targeted because they are responsible for up to 7% of the total global greenhouse gases every year. That includes the emissions of extremely large companies like BHP. Barrick is a comparatively small piece of that pie.

Ethical Problems and Violations

Barrick Gold might have determined that investing in environmental impact studies is a good idea. After all, this is popular with shareholders. But unfortunately, the company doesn't always seem to operate ethically on a global scale.

Many of the issues happened before a mining operation had been acquired by the company. Or the issues occurred in mining operations that have since been closed. But there have been some more recent incidents of human rights violations with regards to protests and environmental impact.

There are other mining companies that tend to work more ethically. It seems that Barrick doesn't care much about committing violations in small countries around the globe, since their shareholders are unlikely to hear about it.

Some of the basic highlights include:

Voluntary Principles

There is an organization called the Voluntary Principles on Security and Human Rights. Barrick has been part of this organization since 2010. The goal is to advise mining, oil, and other extraction-based companies on how to operate well enough to respect human rights.

In order to be admitted to the organization, a company must go through eight steps and be approved by the board of voting members. This board is made up of individuals from governments, other companies, and non-affiliated entities.

Barrick is also part of social responsibility programs, which are meant to give back to the community. It partakes in several organizations and programs that are meant to enhance the transparency of the mining industry.

Barrick has been part of the Dow Jones Sustainability Index since 2007, indicating that they have made efforts to conduct themselves sustainably. The company was also instrumental to the creation of a wildlife conservation space in Papua New Guinea.

All of that is well and good -- it's popular with the shareholders. But when you look behind the curtain, there are some much uglier things going on. Let's take a look at some of the negative impacts that the company has had on different countries.

Argentina

Papua New Guinea

Peru

United States

The Cortez Hills mining project was part of litigation starting in 2009 and going through 2010. Protestors in Nevada were trying to block it from happening. The protestors appealed the decision to let the project continue, but they were denied.

Barrick also negotiated with four Western Shoshone tribes in 2008. They gave the tribes the financial resources for community wellness and scholarships. These funds were used at the discretion of tribal leaders.

The tribal leaders did say that Barrick was a fairly progressive company, and that he was grateful to Barrick for allowing sustainable local development.

Is Barrick Gold a Scam?

Barrick Gold is not a scam. It is a publicly traded company that has been in business for nearly four decades. There are multiple current projects and projects in development that can pay investors dividends.

Rather than investing in the precious metals themselves, you have an opportunity to purchase a share of the company. By doing this, you receive a share of their profits like a traditional stock. But you get the benefits of the precious metals industry.

Even though Barrick Gold isn't a scam, you have to question whether it's the right investment for you. If you're not looking to invest in stocks, then obviously this isn't a good choice. And if you are interested in purchasing shares of mining companies, you need to make sure that this company can stand up to the competition.

Overall, the company is large enough and established enough for us to recommend them. But if you do choose to invest, it's important to pay attention to their investor reports and upcoming projects. They may have to shift their plans due to unforeseen market forces and other circumstances.

If you want an investment that's more stable than the stock market, you can purchase precious metals themselves from a dealer. Unlike a company, the performance of precious metals isn't tied into industry competition or current ventures. But you should keep in mind that these purchases also don't pay ongoing dividends.

Pros & Cons of Barrick Gold

Final Thoughts

Barrick Gold is an extremely large operation that has been in business for almost forty years. They have 16 currently operating sites, which makes them one of the biggest mining companies in the world. There are even more potential projects in development.

The many projects allow for profits to be generated regardless of one mine's performance. For example, if a single mine was to become unusable due to a natural disaster, there would still be 15 others to supplement the income. This makes Barrick a relatively stable bet for ongoing profits.

There are, however, questions about how ethically the company operates. Though it has created environmental impact plans and abides by the rules of the US and Canada, there have been major problems in some of their global mines. Some mining operations have been accused of human rights violations.

Unfortunately, you can't purchase the precious metals themselves from Barrick. Your only option is to invest in the company. So if you're looking to invest part of your money in alternative assets like gold and silver, you'll want to look for a dealership instead.