Is Barrick Gold Corporation (GOLD) the Best Copper Stock to Buy According to Wall Street Analysts?

In the ever-evolving landscape of commodities, copper stands out as a metal of the future, driven by the escalating demand from the energy transition. As electric vehicles and renewable energy applications surge, the need for copper is set to skyrocket, creating a structural supply deficit that could propel prices to unprecedented heights. Amidst this bullish outlook, one company that has caught the eye of Wall Street analysts is barrick gold corporation (GOLD). But is it the best copper stock to buy?



The current bullish outlook for copper prices is driven by several key factors. The energy transition, with its escalating demand for copper, is a significant driver. By 2025, the copper grade A cathode premium in Rotterdam is projected to rise by approximately 25%, reflecting tighter regional fundamentals and a recovering European market. This demand is primarily driven by sectors linked to the energy transition, including electric vehicles and renewable energy applications. As mentioned, "refined copper consumption will be supported by demand from sectors linked to the energy transition."

Improved macroeconomic conditions, such as China’s stimulus package and the Federal Reserve’s rate cuts, are expected to increase liquidity in the financial system. China’s stimulus package, announced in September, represents a significant injection of liquidity totaling 3.95 trillion yuan ($560 billion), equivalent to over 3% of China’s GDP. This substantial package is nearing the level of support provided during the Covid-19 crisis. Alongside the Federal Reserve’s recent rate cuts, this should increase liquidity in the financial system in the coming months.

Tighter market fundamentals, including expectations for smelter production cuts and a recovery in physical demand in China, are also contributing to the bullish outlook. In China, the Shanghai premium should continue its recovery in the final quarter of the year, largely due to the improved sentiment following the substantial stimulus measures implemented by the country’s authorities.

The fourth quarter is historically the strongest for copper, with prices expected to average around $10,265 per tonne in Q4 2024, which would mark a record high. This seasonality, combined with speculative positioning and rapid rebuilding of long positions, is expected to drive prices higher.

Barrick Gold Corporation (GOLD) can position itself to capitalize on these trends by diversifying into copper mining. While barrick gold is primarily known for its gold mining operations, diversifying into copper mining can help the company capitalize on the bullish outlook for copper prices. This can be achieved through acquisitions, joint ventures, or exploration and development of new copper projects.

Investing in renewable energy projects is another strategy that Barrick Gold can employ. Given the strong demand for copper in renewable energy applications, Barrick Gold can invest in renewable energy projects that require significant copper inputs. This not only supports the company’s sustainability goals but also secures a stable demand for copper.

Expanding operations in key markets such as China, the US, and Europe can help Barrick Gold capitalize on the regional demand for copper. For instance, China’s recovery in its physical market and the expected rise in the Shanghai premium present a significant opportunity for copper producers.

Leveraging the improved macroeconomic conditions, such as increased liquidity and lower interest rates, to finance its copper mining and renewable energy projects is another strategy that Barrick Gold can employ. This can be achieved through debt financing, equity issuance, or other capital-raising activities.

In conclusion, the projected growth rates in sectors linked to the energy transition, such as electric vehicles and renewable energy, are expected to significantly influence the demand for copper. As the energy transition progresses, the demand for copper will increase due to its essential role in these sectors. For instance, electric vehicles and renewable energy applications are projected to drive a substantial portion of refined copper consumption. This escalating demand is expected to create a structural supply deficit, which will necessitate increased investments in production facilities. This bullish outlook for copper prices is further supported by the fact that "Fastmarkets’ copper long-term outlook remains optimistic. As we move toward 2034, refined copper consumption is set to be driven significantly by sectors linked to the energy transition, including electric vehicles and renewable energy applications." This long-term outlook suggests that the performance of copper stocks like GOLD will be positively influenced by the growing demand for copper in these sectors. The anticipated structural supply deficit and the need for increased investments in production facilities further underline the bullish outlook for copper prices, which will likely benefit copper stocks like GOLD.

Ask Aime: Should I buy Barrick Gold (GOLD) for the bullish outlook on copper prices?