Dallas, Texas 12/19/2013 (FINANCIALSTRENDS) – Barrick Gold Corporation (USA) (NYSE:ABX) has the distinction of being the globes premier and biggest gold producer. It boasts of a market cap of $16.93 billion and has its mining operations spread across three continents. As a big ticket player among the gold mining companies , the executive would have been keeping their fingers crossed about the meeting yesterday where the Fed Commission decided to initiate tapering measures to the close to $ 85 billion federal aid stimulus to the economy.
Fed Move To Directly Impact Precious Metals Sector
With the decision by Fed to lower its assistance to the market, one of the main sectors which saw their valuations plummet was that of the Gold industry. Hence it would not be a surprise to see the stock market stay away from shoring up the stock of Barrick Gold Corporation (USA) (NYSE:ABX) today in the event of a bear run on the stock.
Reasons for Barrick Investors to Worry
If readers are sceptical as to why the stock of Barrick Gold Corporation (USA) (NYSE:ABX) would be impacted so negatively by this decision of Fed, then they should be advised to pay close attention to the price of gold in the commodity markets after Fed decision came out. Yesterday, the price of gold which has to be delivered in February next year at the New York Mercantile Exchange went down by a significant $17.80 per ounce. The current rates for a ounce of gold at the international markets has settled at $1,217.20 an and is expected to go down even further as businesses take note of this decision and reassess their investment strategies.
This being the case the gold mining firms will be put under more pressure as the demand and the pricing of their main offerings are going to take a further hit. As the tapper move to the tune of $10 billion for now takes effect, investors will find more viable and fast growing investment instruments more attractive rather than parking their funds in the yellow metal. This drop in demand would in turn drive down the already under pressure gold price at the international market. These are strong indicators to investors to reassess their stock holdings in companies such as Barrick Gold Corporation (USA) (NYSE:ABX) which were already under pressure over the trailing 12 months as our stock performance report below indicates.
In the past week, the stock of Barrick Gold Corporation (USA)(NYSE:ABX) has managed to break the continued draining away of its market valuation. It has posted a credible 3.24 percent increase there by reversing some of the deep losses that its market valuation had suffered through the past 12 months. Readers should note that in the past one year, the stock of this gold mining firm has seen its market valuation go down by a big 49 percent. At these discounted valuations, the stock is currently trading at levels which are 52 percent lower than it’s prior 52 week high price points. The major pressure on the stock is being levied on the stock due to the fact that its net losses have zoomed up in the trailing 12 months. It now stands at close to $1 billion from total sales of $13.7 billion in the same period.