Why a Barrick takeover of Newmont would do little for gold investors – by Ian McGugan (Globe and Mail – February 27, 2019)


Many people have described Barrick Gold Corp.’s hostile takeover offer for Newmont Mining Corp. as audacious. A better word might be “unnecessary.”

Unnecessary, that is, from an investor’s perspective. A successful bid would no doubt do wonders for the compensation of Barrick executives, who would wind up running the biggest gold company in the world by far.

However, a tie-up between Barrick and Newmont would do relatively little for gold lovers, who can already target all the precious-metals exposure they want through other channels.

How exactly? If you’re someone who likes the long-term economic case for gold, you can invest in an exchange-traded fund (ETF), such as the SPDR Gold Shares Fund, which holds physical gold. You get a pure play on the precious metal, with all the messy uncertainties of investing in a mine operator stripped away.

Prefer to bet on gold production instead? Then load up on one of the streaming companies, like Wheaton Precious Metals Corp. or Franco-Nevada Corp., that have negotiated rights to continuing flows of mine output from diversified portfolios of producers.

For the rest of this article: https://www.theglobeandmail.com/investing/markets/inside-the-market/article-why-a-barrick-takeover-of-newmont-would-do-little-for-gold-investors/