Gold Is Down a Quarter. Why Is the World’s Biggest Miner Up This Year?
Gold is down a quarter from its January record, and mining funds are falling faster than the metal. Yet Newmont stock is up this year. Anyone holding it as leverage on gold is actually holding something else.
Key points
Gold is down a quarter from its January record, yet shares of the world’s biggest miner are up roughly 16% this year.
Since July 23, the stock has gained 23%, even though the price of gold is practically unchanged from then.
Even after the metal’s drop, the margin per ounce is 2.7 times higher than in 2024, when the stock was trading at half its current price.
Over the past two years, more than 100 million company shares have disappeared from the market, or roughly 9% of the total.
Analysts’ price targets have diverged by 30%, ranging from $119 to $155, with each camp valuing something different.
Two charts that contradict each other this year
The textbook rule says a gold miner’s stock is leverage on the price of the metal: when gold rises 10%, the miner rises 20%, and when gold falls, the miner falls twice as fast. This year’s market confirms that rule to a lesser extent. The GDX mining fund has lost roughly 13% over the past month, while gold is down about 7%. But that doesn’t hold for the world’s biggest miner.
On October 22, gold is trading around 4 090 USD an ounce. It is down 24% from its record closing high of 5 405 USD on January 29, even more from its intraday peak above 5 500 USD, and roughly 6% lower than at the end of last year. Newmont $NEM closed at 116,33 USD on October 21, up roughly 16% since the start of the year. It hit its all-time high of 135,29 USD on August 25, when gold was already 14% below its record.
The sharpest comparison is over the summer. On July 23, the day the company reported second-quarter results, the stock was just under 95 USD and gold was around 4 050 USD. Today, the stock is up 23%, while the metal’s price is practically unchanged.
So something unrelated to the gold chart has lifted the stock price. And that “something” determines whether Newmont serves as a hedge in a portfolio or represents an entirely different bet.