NEM - Newmont: Limited Upside As Skyrocketing Costs Offset Rising Prices (Rating Downgrade)
2024-04-18 22:09:30 ET
Summary
- Gold has been one of the best-performing assets in 2024, rising by 15% year-to-date and 11% in the past month.
- With gold rising with real interest rates, history suggests that either gold will likely reverse soon or long-term bonds will rally.
- Gold miners, like Newmont, have not participated in the gold rally, raising questions about their potential benefits from higher gold prices.
- Newmont's AISC rose faster than gold since 2022, stemming from labor and material cost growth in developing markets.
- NEM is likely fairly valued today as its forward "P/E" reasonably accounts for continued AISC expansion, offset by the recent rally in gold.
Gold is one of the best-performing assets of 2024, rising by 15% year-to-date and 11% over the past month. Over that period, stocks and bonds have, for the most part, stagnated. Interestingly, the US dollar has also performed well this year, a rare instance of gold and the dollar rising together. Fundamentally, that may indicate a rise in monetary risks outside the US, causing foreign currencies to decline and gold to increase sharply. That said, gold remains risky because real interest rates are relatively high, implying that bonds are greatly oversold or gold may be overvalued....
Newmont: Limited Upside As Skyrocketing Costs Offset Rising Prices (Rating Downgrade)