⚠ Leverage Points Both Ways, and the Market Knows ItHigh threat
Barrick Mining (B) — threat to the moat
Twelve times earnings at record gold is not scepticism about the company; it is a refusal to capitalise earnings that belong to the price.
Operating leverage in a miner is arithmetic. Costs are largely fixed per tonne, so a rise in the metal price flows almost entirely to profit — and a fall does the same in reverse.
Barrick's recent results are the upside version. Revenue rose sharply on a realised gold price above $4,800 an ounce, with net earnings in one quarter up 238 percent, on no meaningful change in what the company actually did. Gold averaged $3,431 an ounce across 2025, up 44 percent, and set 53 all-time highs1.
The market's response is the interesting part. Barrick trades at roughly twelve times earnings while the commodity it sells is at a record, which is not scepticism about the company so much as a refusal to capitalise earnings that are understood to be a price. A multiple of twelve on peak-cycle profits is not obviously cheaper than a multiple of twenty on normalised ones.
The leverage is also asymmetric in a way that is easy to forget in a good year. With 2026 AISC guided to $1,760 to $1,950, a gold price back at $2,000 would compress margin toward nothing at the upper end of that range.
The number to watch is the cost line rather than the margin. Margin at record prices tells you about gold; cost per ounce tells you about Barrick.
- ReportedThe LBMA gold price set 53 all-time highs in 2025 and averaged US$3,431.5/oz, up 44%, with a record Q4 average of US$4,135.2/oz.World Gold Council, Gold Demand Trends Q4 and Full Year 2025 — total gold demand including OTC exceeded 5,000t for the first time, worth an unprecedented US$555bn (+45%), with the LBMA gold price setting 53 new all-time highs during 2025; the annual average price was US$3,431.5/oz (+44%) and the Q4 average a record US$4,135.2/oz (+55%). Supply: mine production a record 3,671.6t (+1%), net producer hedging -73.6t, recycled gold 1,404.3t (+3%) — described as a relatively muted response to a 67% increase in the US dollar gold price — for total supply of 5,002.3t. Demand: jewellery fabrication 1,638.0t (-19%) and jewellery consumption 1,542.3t (-18%) with jewellery demand value up 18% to a record; bar and coin 1,374.1t (+16%), a 12-year high; ETFs and similar products +801.2t against -2.9t in 2024, the second strongest year on record; central banks and other institutions 863.3t against 1,092.4t, at the upper end of the expected range, historically elevated and geographically widespread but slowed from their recent pace — FY2025 · publ. 2026-01-29 · source ↗