Empirical Methods in Finance -

Course Project

Barrick Mining Corporation Stock Price in the Economy

Instructor: Jose Arreola Hernandez

Group members: Huawei Wang

Luhong Zeng

ShiHua Liu

Francisco Garza

Raul Saldana

Jules Béranger
Key Words : Barrick Gold Corp. , gold price , silver price , Newmont Mining Corp. ,
US Dollar index , regression analysis , stock price.

Executive Summary

In this report, the six of us will try to determine if there is a correlation between
Barrick Mining Corporation’s stock price and other relevant aggregates that should
influence its activities. This company is the world leader of the gold mining industry.
Other aggregates like silver, US dollar index, Newmont Mining Corp. stock price and
the gold price index have a huge impact on our company’s stock price.

In order to do so, we will use the regression analysis of our data (daily basis over 10
years) and analyse the results. With this study, we are making an assumption to
correlate our variables, although its predictable, our main goal is to explain the model
and show how it works. It is a great example to explain the model, get to know it and
analyze it in a very detailed and academic way.

We will try to inform the strong relationship between quoted gold and silver prices,
with a stock market share of a mining company, as long with the share of the
industry leader in the same field. Hopefully, the linear regression will implicate the
factors we are considering, with the stock price and its affections, whether directly or
indirectly.
 Table of Contents

1.Introduction 4

2. Theoretical Framework 5

3. Data Analysis 8

4. Methodology 10
1)The Model 11
2) Sensitivity analysis 12
3) Hypothesis Testing 13

5. Analysis of results 14
1)Results interpretations and discussion 14
2）Implications 17

6. Conclusions 17

7. Bibliography 19
1.Introduction
Many years ago, gold was used as a currency. Until recent times, it was used as a
standard for currency equivalent for specific countries. From World War II to 1971,
the Bretton Woods system pegged the gold and the US dollar following the crisis
post first World War. After this, in 2000, Swiss franc currency was the last one to be
divorced from the gold. Thus, before gold had a central position on the exchange
markets all around the world. It still does, but today its role is a store of value. It is
the most popular investment of the precious metals and is considered safe with good
hedging properties.
As most of the commodities, gold price is driven by supply and demand. But what if
the investor would like to invest directly in the company that directly supplies the
gold. The benefits would be to see the profits and value of the stock to rise if gold
price rises. In real life it is more complicated as the company is under lots of other
political and legal factors that can affect the stock price : flooding, structural failure,
mismanagement, bad publicity, or corruption. Those factors can drive the price
down.
This project’s goal is to find and analyze any relations between a gold mining firm’s
stock price and other economic factors that are closely related to this industry.
In order to find any relationship, we will use independent aggregates such as : gold
price index, silver price index, Newmont Mining Corp. stock price, US Dollar spot.
Our dependent variable will be the stock price of the current number one gold mining
company : Barrick Mining Corporation. All those data are sourced from Bloomberg
database.
We thought it would be relevant to study different time periods. The overall is from
2007 to 2017, but in the document we will break this into 2 different parts in order to
observe the impact of the crisis for instance. Also, the data are on a quarterly basis.
In addition, it is very interesting to study the stock price of this mining company
because there is no geographical limitation. Barrick Mining Corp is operating in many
different countries around the globe.

Barrick Mining Corporation

This Canadian company has its headquarters in Toronto, CAN. Since 1983, its
assets are all over the world : USA, Canada, Peru, Chili, Australie, Tanzania and
Argentina. Its listed on the New York Stock Exchange and is the worldwide leader.
The firm only produces gold. In 2016, it produced 5.52 million ounces of gold with
85.9 million ounces of gold reserves.
The objectives are set in this introduction. We will see later in the methodology part
how we will proceed to run our calculations.
Why did we choose this project ?
First we enjoyed the availability and accuracy of our data. The gold price is a
reference on the stock markets for years already. Mining corporations are quite old
and well established companies which is very interesting to observe.
At the end of our project we will be able to think about this question that could lead to
a new project in the future : is cryptocurrencies the new hedging investment ? Is gold
still the best opportunity ?
Lots of other projects have been done through the years about the gold stock price.
We chose to have a more corporate point of view by taking a company’s stock price
has dependent variable.
We will structure our project in a specific timeline. To be the most accurate possible,
our data will be included between 2007 and 2017, on a daily basis. This gives us
about 3 650 tranches of data. Although we need to keep in mind the issue of the
2007-2008 crisis that might influence our data. The results and the conclusion will
follow the calculation running.
Our project will not be relevant for any economist expert or whatsoever. Although it
would be relevant for any students who would like to learn about the influence of the
gold stock price on other aggregates.

2. Theoretical Framework
Our analysis fall in the category of studies that analyze the in-relationship between
variables. What we want to study is the gold industry by analyzing the changes in the
stock price of world's NO.1 gold producer, Barrick Gold Corporation to reflect the
impact of some specific economic factors that we want to study.
The basic theory regarding stock price forecasting is the Efficient Market Hypothesis,
which asserts that the price of a stock could reflects all information available and
everyone has some degree of access to the information. Kearney and Daly (1998)
examined, in their paper, the extent to which the conditional volatility of stock market
returns in a small, internationally integrated stock market is related to the conditional
volatility of financial and business cycle variables.
Our assumption was made through an overview of the stock price and its
determinants, which are price quote for gold, US dollar index, trading value for silver,
and the stock price Newmont Mining Corp.

●Gold price index and Barrick Mining Corp. stock price

Around 3600 B.C. the ancient Egyptians were the first to dig out gold. A thousand
years later, ancient Mesopotamia used gold to produce jewelry for burial rituals.
Since then, gold has been a source of conflict because of the desire of mankind to
own it. Today, the most popular purpose of gold is to make high quality jewelry,
institutions and corporations are using it for an investment purpose but also high tech
and electronic industry is using it in its manufacturing process.
We said that gold is used to hedge against uncertainty such as inflation, deflation or
currency devaluation. In the past, we saw that when expected return on bonds or
equities, or estate fall, the price of gold increase because of all the investments is
arouse.
As a consequence, we expected the price of gold to be positively related to the stock
price of the Barrick Mining Corp. In fact, if the price of gold increases, the value of
the production of Barrick increases, hence the profit increases. If the price of gold
goes down, the profit goes down as well.

● Silver price index and Barrick Mining Corp. stock price

Such as gold, silver was also used in the past as a currency. Today, it is an
investment opportunity too, with good hedging properties. Medical and electronic
devices have seen their silver consumption increasing tremendously over the past
few years.
The relationship between silver and gold : on the long-run, those two precious metal
stock price are correlated, they are following the same trend because they are both
considered as an haven investment against currencies depreciation. Although,
surprisingly, in the short-run the silver price is not related to gold’s. Because of its
multiple industrial uses, It is more on the trend of the general industrial growth. In
other words, the economic growth is hard to measure so the data takes more time to
be available for shareholders. The analyst Ari Wald says silver price is delayed in the
short-run and this shows the risk interest of shareholders.
As a result, we still think that silver price is positively related to the stock price of
Barrick Mining Corp. Even though those precious metals are not behaving exactly
the same, on the long run they still have the same properties of hedging against
currency fluctuations. So if the price of silver increases, Barrick’s stock price should
increases as well.

●Newmont Mining Corp. stock price and Barrick Mining Corp. stock price
Newmont Mining Corporation is the second largest gold mining company in the world
after Barrick. At the origin it was mining in Nevada in 1965, but it also has assets in
Australia, Canada, Ghana and Peru. It produces also a lot of copper. The company
was established in 1921 and began publicly trading in 1925
Such as Barrick, Newmont operates in the mining sector, specialized in gold. So we
would expect the stock price of those two companies to follow the same trend
relative to gold price because of the supply and demand.

Although the gap between those two companies are according to the results,
management and decisions of the companies. Investors are rational, that means
they will invest in the company that have the lower risk. Also mining companies issue
very few dividends because of the huge investments needed. As a consequence
those companies are creating value for the shareholders through capital gains.
That’s why we choose not to integrate dividends per share in this project.

To sum up, we all expect the share prices of those two companies to follow the same
trend : gold index. Although if there is any disparities we shall investigate them
through a corporate point of view.
●US Dollar index and Barrick Mining Corp. stock price
The U.S. dollar index (USDX) is a measure of the value of the U.S. dollar relative to
the value of a basket of currencies of the majority of the U.S.'s most significant
trading partners (Investopedia).
As we said earlier, we saw that gold is a store of value to hedge against currency
depreciation. During the 2007 crisis, the gold price did rise against the US dollar.
Then we expect the US dollar to be negatively related to the gold stock price, hence
negatively related to the stock price of Barrick Mining Corporation. A depreciation of
the US dollar, would increase the demand of the gold, hence increase gold price.

In economic studies, it can almost be seen that every economic phenomena is

closely interrelated to the quantitative aspects of the financial. For this reason, a
correct method of economic analysis cannot ignore the importance of the
quantitative approach to the description and analysis of a phenomena.

In order to analyze the relationship, the dependent variable we set up is the stock
price of Barrick Gold Corporation and consider price quote for gold, US dollar index,
trading value for silver, and the stock price Newmont Mining Corp as our
independent variables. We choose to use the multiple regression analysis. As
learned on the course, we use the common spreadsheet application( e.g. Microsoft
Excel) to help us compute and model the relationship. Multiple regression analysis is
a powerful statistical test used in finding the relationship between a given dependent
variable and a set of independent variables, enable us to rough estimate the data of
one of the related phenomena when the data of the others is known.

3. Data Analysis
We chose as an independent variable a company which can be analyzed with
different kind of variables, so we pick ABX US Equity a mining company stock price
and make the regression on its percentage change. As independent variables we
pick Price of Gold in the US, Price of Silver in the US, Newmont Mining, and An
Index for the US Dollar Price.

ABX US Equity is the tradable stock in NYSE for Barrick Gold Corporation, Barrick
Corp. is a worldwide company from the mining industry, actually have operations un
United States, Canada, South America, Australia, and Africa. (Hoove’s Inc.)

Barrick Gold Corporation became company number 1 of mining industry just after
acquiring Place Dome in 2016. Nowadays the number 1 in market capitalization in
the mining industry is New Mont Mining. Barrick Gold Corporation produces 8 million
ounces of gold annually.

NEM Us Equity, number 1 mining company in market capitalization in the NYSE

according to Bloomberg, Newmont Mining Corporation one of the biggest mining
companies, in gold production Barrick Corporation is number 1. Was founded in
1925, is a company with presence in US, Australia, Ghana and Peru. It started
trading in 1925. Even though this variable may be seen as the principal competition
of Barrick Corporation, we believe on a positive correlation due to same market
industry and also has the same response to change in price of demand and price of
gold which are the principal factors that may affect the stock price.

Gold price was analyzed by GC1 COMDTY, which basically is the price of gold per
ounce in United States. We believe this variable will be positively and hardly
correlated, if gold price increases the revenues to Barrick Gold increases, the market
value increases as well, dealing to an increase in demand and price to Barrick Gold
Corp Stock

DXY Dollar Index Spot is basically an index which explains the appreciation or
depreciation of the Us dollar in terms of 6 different currencies, weighted differently
according to its relative impact on the US dollar. This Index is explained by the most
traded currencies, Euro, Japanese Yen, British Pound, Canadian Dollar, Swedish
Krona and Swiss Franc. We believe this variable can impact on our dependent
variable and can be negatively correlated. Us dollar and Gold are frequently used as
an investment or a backup asset instrument, so when gold price increases, people
will rather invest in gold instead of US dollar, so its value will decrease.

We also include a variable from the same market, but they may have not much
impact, so we decided to include Price of Silver, explained by XAG BGN CURNCY.
We believe this variable can impact positively but not enough to explain the
movements in stock price of Barrick Gold. Both are precious metals but they are not
“competitors” so when demand for precious metals increase, price increase as well
for both of them.
We pick up the data from Bloomberg and decided to make it in a daily frequency on
a 10-year period from 2007 to 2017. We also pick all the information from the US
market in order for it to make sense. 2008 crisis affected prices from almost every
stock, commodity, currency, etc. So we decide to include this crisis lapse on our
period analyzed, this way we can prove that even though market suffered a strong
and unusual volatility, our model still make sense and we can explain the movement
in price of ABX US Equity with our four independent variables.

4. Methodology
An empirical-analytical quantitative method was applied to investigate the research
question, the relationship between the stock price of the mining company, Barrick
Gold Corporation, and the factors influencing its price.

The assumption was made through the overview of the previous literature regarding
the stock price and its determinants, which are price quote for gold, US dollar index,
trading value for silver, and the stock price Newmont Mining Corp., one of the
industry leaders of the world's largest gold producers.
Barrick Gold Corporation is the largest gold mining company in the world with
operating mines and development projects in the United States, Canada, South
America, Australia, and Africa. As its main products for gold and mines, factors
influencing the company’s stock price like price quote for gold and trading value for
silver were selected. The stock price of another industry leader, Newmont Mining
Corp., was also taken into consideration to reflect the industry prospect. Besides the
U.S. dollar is the benchmark pricing mechanism for the price of gold around the
world. Strength or weakness in the dollar can affect the price of gold. It’s important to
include US dollar index as a significant factor influencing the target company’s stock
price.
Based on the second-handed data collection from Bloomberg and online resources,
the relationship estimation was made. One the one hand, gold price, silver price and
stock price of the industry leader will positively impact the stock price of Barrick Gold
Corporation. On the other hand, the gold price and US dollar had an inverse
relationship. Hence, a model for multivariable linear regression is identified after
making the assumption and plotting the data to a graph.
1)The Model

In this section we propose the underlying model by assuming that there is a linear
relationship plus an error term.

Yi = β0 + β1X1 + β2X2 + β3X3 + β4X4+εi

Yi = the stock price of Barrick Gold Corp. (ABX US Equity)

X1= trading value for silver (XAG BGN Curncy)
X2= price quote for gold (GC1 COMB Comdty)
X3= the stock price of Newmont Mining Corp. (NEM US Equity)
X4= U.S. dollar index (DXY Curncy)
β1 = the coefficient of X1; β2 = the coefficient of X2
β3 = the coefficient of X3; β4 = the coefficient of X4

The associated parameters are then estimated by the method of linear regression,
as the Figure1 showed. The coefficient sign of X1, X2 and X3 were positive which
corresponded to the estimation. The coefficient sign of X4 was negative which
corresponded to the estimation as well. R2, a measure of goodness-of-fit, was given
to see the appropriateness of the linear assumption. R2 = 0.745584, which explained
the overall fit of the regression was good.

Figure 1: OLS, using observations 2007-11-01:2017-11-01 (T = 2519)

Dependent variable: ABX

Coefficient Std. Error t-value p-value

const −0.0002658 0.00030691 −0.8662 0.3865

5 5
XAG 0.155146 0.0233213 6.653 <0.0001 ***
GC1 0.333216 0.0375335 8.878 <0.0001 ***
NEM 0.782492 0.0143937 54.36 <0.0001 ***
DXY −0.260603 0.0644823 −4.041 <0.0001 ***

Mean dependent var 0.000013 S.D. dependent var 0.030495

Sum squared resid 0.595747 S.E. of regression 0.015394
R-squared 0.745584 Adjusted R-squared 0.745179
F(4, 2514) 1841.865 P-value(F) 0.000000
Log-likelihood 6941.959 Akaike criterion −13873.92
Schwarz criterion −13844.76 Hannan-Quinn −13863.34
rho −0.067193 Durbin-Watson 2.134007
2) Sensitivity analysis

To predict the outcome of how different values of the independent variables

impacted the dependent variable given different time period, another two time spread
were chosen, from 2009-2017 and from 2013-2017, as Figure 2 and Figure 3
illustrated. As a result, the value of the most important parameters did not change
much, including R2, coefficient, t-value and p-value. Therefore our observation data
set was examined to be liable.

Figure 2: OLS, using observations 2009-11-01:2017-11-01 (T = 2016)

Dependent variable: ABX

Coefficient Std. Error t-value p-value

const −0.0003129 0.00031177 −1.004 0.3156
80 5
XAG 0.142326 0.0268123 5.308 <0.0001 ***
GC1 0.320847 0.0448623 7.152 <0.0001 ***
NEM 0.787863 0.0169047 46.61 <0.0001 ***
DXY −0.212240 0.0711491 −2.983 0.0029 ***

Mean dependent var −0.000124 S.D. dependent var 0.026439

Sum squared resid 0.393569 S.E. of regression 0.013990
 R-squared 0.720583 Adjusted R-squared 0.720027
F(4, 2011) 1296.533 P-value(F) 0.000000
Log-likelihood 5749.120 Akaike criterion −11488.24
Schwarz criterion −11460.20 Hannan-Quinn −11477.95
rho −0.024571 Durbin-Watson 2.046353

Figure 3: OLS, using observations 2013-11-01:2017-11-01 (T = 1008)

Dependent variable: ABX

Coefficient Std. Error t-value p-value

const −0.0002592 0.00049334 −0.5256 0.5993
98 5
XAG 0.213893 0.0531527 4.024 <0.0001 ***
GC1 0.418471 0.0823749 5.080 <0.0001 ***
NEM 0.775827 0.0244043 31.79 <0.0001 ***
DXY −0.306736 0.118723 −2.584 0.0099 ***

Mean dependent var 0.000117 S.D. dependent var 0.029104

Sum squared resid 0.245265 S.E. of regression 0.015637
R-squared 0.712465 Adjusted R-squared 0.711318
F(4, 1003) 621.3178 P-value(F) 1.2e-269
Log-likelihood 2763.565 Akaike criterion −5517.130
Schwarz criterion −5492.552 Hannan-Quinn −5507.793
rho −0.023748 Durbin-Watson 2.043446

3) Hypothesis Testing

To examine whether the regression outcome was due to statistical significance level,
hypothesis testing was executed. Four main hypotheses are made as followed:

H1: X1 was expected to impact positively on Y

H2: X2 was expected to impact positively on Y
H3: X3 was expected to impact positively on Y
H4: X4 was expected to impact negatively on Y

According to the regression analysis showed on Figure 1, at a 5% level of

significance and 2514 degrees of freedom, or 1% of significance level
X1 t-value was 6.653>1.645 (critical t-value tc for 5%) , 6.653>2.576 (1%)
X2 t-value was 8.878>1.645 (critical t-value tc for 5%), 8.878>2.576(1%)
X3 t-value was 54.36>1.645 (critical t-value tc for 5%), 54.36>2.576(1%)
X4 t-value was −4.041<−1.645(critical t-value tc for 5%), −4.041<−2.576(1%)
Therefore, all of the four can reject the null hypothesis. It made sense to all the
coefficients estimated.

5. Analysis of results

1)Results interpretations and discussion

In this part, the results and interpretations of the relationship between stock price of
Barrick Gold Corp. and four variables employed in the study are illustrated. The
regression results are presented in Table 1. The Ordinary Least Squares procedure
is used to estimate the regression model in this study. In our regression, r-square is
0.75 approximately. It means that 75% of the variation in the dependent variable
that is predictable from the independent variable. And p-value of all variables is
much less than 0.05, so our sample provides enough prominent evidence to reject
the null hypothesis.

Coefficient Std. Error t-value p-value

const −0.0002658
0.00030691 −0.8662 0.3865
XAG 0.1551460.0233213 6.653 <0.0001
GC1 0.3332160.0375335 8.878 <0.0001
NEM 0.7824920.0143937 54.36 <0.0001
DXY −0.2606030.0644823 −4.041 <0.0001
Table 1
Stock price of Barrick Gold Corp.and gold price

The table indicates that the increase of gold price has a positive impact on Barrick’s
stock price. The positive coefficient implies that an additional one percentage change
increased in gold price will lead to 33.32% of increase in percentage change of
Barrick’s stock price. Thus, the result concluded that there was positive linear
relationship between change rate of Barrick’s stock and gold price. ABX US Equity
increases as gold price increases, vice versa. Besides, t-statistic test was used to
identify the significance relationship between Barrick’s stock price and independent
variables. From the estimation results shown, t-Stat for gold price is 8.878. Since we
cannot find the critical value for degree of freedom of approximately 2000. We adopt
degree of freedom of Z at 5% and 1% of significance level which is 1.645 and 2.576.
And our t-Stat for gold price is exceeded the critical value. Thus, null hypothesis was
rejected. Therefore, there was significance relationship between Barrick’s stock price
and gold price.

The reason why gold price and mining company’s stock price have positive
relationship is that when the gold price increase, the profit and expected return of
mining companies increases. Consequently, the dividend goes up and the demand
of company’s stock increases, which will lead to the increase of its stock price,
especially for companies like ABX which is the world's NO.1 gold producer. A
number of studies have examined the relationship between gold prices and gold
mining company returns. Rockerbie (1999) and Selvanathan and Selvanathan
(1999) proved that gold prices have decisive implications for gold production.
Moreover, financial decisions by gold companies to hedge against gold price
oscillations depend on their market value (Brown et al., 2006; Adam et al., 2016). In
conclusion, Gold commodity prices and the market value of gold-mining companies
are intrinsically related.

Stock price of Barrick Gold Corp.and silver price

As shown in the table, the positive coefficient of percentage change of trading value
for silver to US dollar 0.155146 indicates when there is an additional one percent
increase in silver price, percentage change of Barrick’s stock price will increase by
15.5146%. In other words, change rate of silver price is positively related to change
rate of mining company’s stock price. Since the t-statistic (6.653) is larger than the t-
critical value (1.645 and 2.576) at 5% and 1% of significance level, thus, null
hypothesis is rejected. Therefore, silver price has positive impact on mining
company’s stock.
Because silver is another main product of ABX company (the first one is gold), so
explanation for the relationship between silver price and mining company’s stock
price is similar to gold price and mining company’s stock price. Besides, coefficient
of silver price is smaller than coefficient of gold price, which is same as what we
assumed before study. But it also has pretty prominent impact on stock price. We
think the reason might be that the volatility of silver price is very big. Luis A. Gil-Alan
(2015) discussed that volatility creates risk that is associated with the degree of
dispersion of returns around the average. Therefore, silver price with higher volatility
might have more prominent impact on mining company’s stock price.

Stock price of Barrick Gold Corp.and stock price of Newmont Mining Corp

Next, the coefficient of NEM, which is 0.782492 indicates that if the stock price of
Newmont mining corp. increases by 1%, the percentage change of stock price of
Barrick Gold Corp. will increase by 78.2492%. Therefore, positive relationship is
found between change rate of stock price of these two countries. Besides, the t-
statistic generated, (54.364) is bigger than critical t-value (1.645 and 2.576) at 5%
and 1% of significance level. Thus, null hypothesis is rejected. In conclusion,
percentage increase in Newmont’s stock price will positively affect ABX US Equity.
As we analyze before, Newmont Mining Corp. which is one of the top mining
companies in the world can represent the general situation of mining industry. In this
way, if the economic and political situation of mining industry is good and the whole
industry operates well, Barrick, the company we research on, will also perform well.
On the contrary, if the mining industry is going downward, our mining company
cannot survive and then their stock price will decrease as well.

Stock price of Barrick Gold Corp.and US dollar index

At last, the table illustrates that US dollar index is negatively related to our
dependent variable. The coefficient of DXY is −0.260603, which can be interpreted
as one percentage increase of value of dollar will lead to 26.0603% of decrease in
the percentage change of stock price of ABX. And besides, the hypothesis testing
also shows that US dollar index is negatively related to the company’s stock price. T-
statistic is −4.041, so the absolute value is larger than critical t-value (1.645 and
2.576), which leads to the rejection of null hypothesis. Therefore, if value of dollar
increase, stock price of ABX will decrease, vice versa.
Value of dollar is one of the most important factors for the fluctuation of gold price.
According to previous literature, when US dollar appreciates, gold price depreciates.
When US dollar depreciates, gold price appreciates. The reason is that the
appreciation of dollar represents a good economic situation in America. The
economy is growing and business cycle is expanding. In this situation, people are
active in bond and stock market. Gold market can be considered as a substitute of
bond and stock market. When the demand of bond and stock increases, the demand
of gold will decrease. Consequently, gold price will decrease. On the other hand. In
recession, stock market goes down and investors switch to gold market. The
demand of gold will increase, and thus gold price will increase. In this way. Gold
mining company can get a better return and can provide better dividend. Therefore,
demand of mine companies’ stocks will increase, which leads to the appreciation of
its stock price.

2）Implications

Relationship between the gold market and the stock market

In most situation, the stock market is a risk asset, while gold is a safe-haven asset.
The emergence of market uncertainty will lead the investors to buy gold instead of
purchasing of stocks. The main business of Barrick Gold Corporation that we studied
is the exploitation of gold. As a result, the signal of changes in the gold market will
strongly affect the expected earnings of the company and thus its share price. In
conclusion, in an uncertain investment environment, the share price of Barrick can
maintain a high expected return due to its nature, considered it as one of the safe-
haven alternative investments.

Minerals lead to environmental pollution

Mineral resources are nonrenewable resources, and their reserves are limited. In the
mining process, it is indispensable to produce environmental problems. Mine
production process and the waste generated in the production process will cause
disturbance and pollution to the environment. Therefore, Barrick should rely on
scientific and technological progress with environmental control measures, which will
definitely increase the cost, but it can minimize the impact of mining activities on the
ecological environment and promote mining process to a sustainable development.

6. Conclusions
This study was made using linear regression, to analyze a model that implicates
Barrick Gold Corporation and the factors affecting its price in the stock market. The
model is based on running an empirical quantitative method to run different
regressions to estimate how much gold, US Dollar Index, trading value for silver and
the stock price of Newmont Mining Corp, one of the largest gold producers, influence
in Barrick Gold Corporation’s stock price in de the market.
Based on Bloomberg’s resources the model was created, the US dollar index was
used as a benchmark pricing mechanism for the price of gold around the world. Gold
price, silver price and stock price of the industry leader has a positive impact with
stock price of Barrick Gold Corp. US dollar index had an inverse relationship. Many
of the statistical results corroborate our first thoughts about the variables, for
example the results suggest that the stock price of Barrick has statistically significant
effects in increasing every time gold prices, silver prices and the stock price of
Newmont.
The different time period gave to the study a more statistical meaning to the
regression, it was an easy way to sum up two long periods and create a more
accurate result, and we expect the share prices in both periods of time, to follow the
same trend throughout the time, and at the end a model for multivariable linear
regression is identified after making the assumption and plotting the data to a graph.
We had some very good positive effects in the coefficient, implicating good
relationship between our variables. We found out very interesting facts, such as gold
price and mining company’s stock prices have a very positive relationship; financial
decisions by gold companies to hedge against gold price oscillations depend on their
market value, gold commodity prices and the market value of gold-mining companies
are intrinsically related.
In this study, we can conclude that the relationship, even though it is really easy to
expect, we found really interesting effects, the findings suggest that the variables
affect directly our independent variable, this study has interesting findings to
students trying to understand empirical models for regression.
Our report has several limitations, even though our price is correlated with the gold
and silver prices. Mining corporations have a lot of other factors like event news,
supply and demand in the stock markets. Also, the model is not taking into
consideration other variables that definitely will affect our model, like demand or
supply of gold or silver in the world. Income levels in the different economies.
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