Staff Reporter
Gold has held its value since the dawn of humanity and continues to be a safe-haven asset today. Recent uncertainties in the stock market have sparked a gold rush, with prices in U.S. dollars climbing nearly 24% over the past year.
When looking back to 2000, gold has surged over 900%, significantly outpacing the S&P 500’s 489% increase during the same period. Newmont Corporation (NEM), the largest gold mining company globally, has seen its shares rise over 40% year-to-date.
Should you consider investing in Newmont Corporation now, or has the opportunity slipped away? Here’s what you need to know.
Understanding Gold Mining Stocks Like Newmont Corporation
Gold is a precious metal extracted from the earth. When you invest in physical gold or a gold-backed ETF, you own a slice of the existing gold supply.
By purchasing gold mining stocks, you gain equity in gold reserves that are still underground. Newmont also produces copper, silver, zinc, and lead, making it a diversified player in the mining sector.
Newmont operates globally, managing both directly owned mining projects and those through joint ventures. Its financial performance hinges on two key factors:
- The quantity of gold and other metals produced.
- The current market prices for these metals.
The Boom-and-Bust Nature of Gold Investment
Investors turn to gold for various reasons. Its long-standing value and limited supply make it a popular hedge against inflation. Demand often spikes during turbulent times, a trend reinforced by recent tariff announcements from the Trump Administration that cast uncertainty over the market.
Historically, gold prices have experienced cycles of boom and bust, a pattern observed repeatedly since the late 1970s. While the long-term trend is upward, gold prices have not consistently provided reliable returns over extended periods. This explains why Newmont Corporation has yielded a total return of only 240% since 1989. The future remains uncertain, and simply holding Newmont shares may not guarantee strong outcomes.
Is This Gold Rush Approaching Its End?
Gold has surged to new all-time highs over the past year, but predicting short-term price movements is challenging. Current indicators suggest that gold may be approaching its peak.
Market fear is palpable; the VIX index, which measures anticipated stock market volatility, recently reached its third-highest level on record. The U.S. Index of Consumer Sentiment has dropped to near historic lows. Google Trends data shows a significant increase in searches for terms like “how to invest in gold” and “gold stocks” in recent weeks.
While gold is a tangible asset, it lacks an underlying business to generate earnings that support its value. Its worth is driven by market dynamics, meaning that peak fear could coincide with peak demand for gold, influencing prices accordingly.
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