Barrick Gold (NYSE:ABX) looks overvalued to us and we recommend buying downside protection in the options market. Given its large capital expenditures on both acquisitions and organic growth, we see a large negative cash flow for the next two years, resulting in increased debt, leverage and, possibly, equity issuance. Its cost overruns and delayed start to its vaunted Pascua-Lama mine hurt its credibility with investors and recent comments from management have rung hollow. Looking beyond these problems, we see the stock's current price (about $34 per share) reflecting a 6% relative growth of gold prices vis-a-vis cost of production which we believe is unrealistic. It will survive, but we see a share price in the mid 20s as...
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