Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Barrick Gold Corporation (USA) (ABX): 1 Company Best-Suited to Survive Falling Gold Prices

From a high point near $1,900 an ounce reached in August of 2011 — and a more recent high near $1,800 last September — gold prices have plunged to something like $1,400 an ounce in June 2013. From top to tip, the value of an ounce of pure gold has lost almost precisely 25% of its value, and the value of a share of the SPDR Gold Trust (ETF) (NYSEARCA:GLD) is down 23%.

Will gold fall further? I don’t know. In fact, as I recently argued online, I don’t think anybody knows how far gold will fall, how far it might rise, or even what the shiny stuff is worth. But I do know which gold mining stock is in the best position to keep earning profits if gold prices drop — and to earn even more profits if gold prices stabilize or improve: Barrick Gold Corporation (USA) (NYSE:ABX).

Barrick Gold Corporation (USA) (NYSE:ABX)

All-in on gold
How do I know? From a recent report on, that’s how. You see, crunching the numbers on gold mining companies, starting with the cash costs these companies incur in digging yellow rocks out of the ground, and continuing through to calculate the “all-in sustainable cash cost” of mining an ounce of Au, visualcapitalist has come up with a report of which miners operate most efficiently. And this leads directly to a conclusion of which gold stocks can earn the most profit from producing gold.

Here are the results:

As visualcapitalist explains, it’s important to know the all-in cash cost a company incurs in producing an ounce of gold. This is because the cost of mining is directly responsible for the company’s ability to generate free cash flow — or not.

Today’s high cash-cost of digging through 9.4 tons of dirt in hopes of extracting a golf-ball’s weight of pure gold explains why most of the major gold miners — from low-cost producer Barrick Gold Corporation (USA) (NYSE:ABX), all the way up through Kinross Gold Corporation (USA) (NYSE:KGC), Newmont Mining Corp (NYSE:NEM) and Goldcorp Inc. (USA) (NYSE:GG) — are currently in a negative free cash flow state. (Well, the high cost plus the relatively lower prices that miners are getting for their gold today).

That being said, the large scale of Barrick Gold Corporation (USA) (NYSE:ABX)’s operations — $14.3 billion in annual revenue, or 50% bigger than No. 2 Newmont — gives the company an advantage in cost of production. That advantage is further compounded by the company’s focus on North American operations, where according to visualcapitalist, cash costs of mining are lower than anywhere else in the world — $598 per ounce, versus, for example, the $957 per ounce price tag that’s the cheapest cost in Africa.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.