Barrick Gold Corp (ABX)

We expected a greater correction in the price of gold, and it may yet come, but when it is over clearly well selected mining plays have shown the potential to outperform the price of the underlying ore itself. While Barrick has gained as much as 33% since gold began its move it lags the best performers which have gained better than 50%. Still, we expect far better things from Barrick Gold (ABX) going forward and favor it now as our miner of choice.

The reason is that Barrick has traditionally heavily hedged their production. This shielded them from the volatility in gold's price, but with this asset in a clear uptrend for the better part of a decade the company has robbed itself of the benefit of gold's rise.

No longer.

Recently the company unwound the last of its hedges. Given that this is one of the largest and most liquid gold miners on the market we believe the stock will become a vehicle of choice for those seeking exposure to the mining sector.

Barrick's stock price has pulled back with the price of gold, and is trying to turn at its 50 MA. While material stocks will react more to the price of their underlying asset than to technical signals, should the price of gold turn soon we feel entry here will be compelling. We will enter a long position over yesterday's high with a stop under yesterday's low.