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Newmont Mining: 'Sleep Well At Night' Exposure To Gold

Mar. 08, 2018 6:23 PM ETNewmont Corporation (NEM), NGT:CA14 Comments
Vladimir Zernov profile picture
Vladimir Zernov


  • Newmont Mining is one of the rare gold stocks that is up year to date.
  • There are a number of positive factors that favor Newmont Mining.
  • The stock is a good "sleep well at night" way to get gold exposure. For outsized returns, search elsewhere.

Recently, I've been searching for opportunities in the gold space. The reason for this is the major difference in price dynamics between gold (GLD) and gold mining shares (GDX). If we measure performance by ETFs, gold represented by GLD is up 1% year to date, while gold miners represented by GDX are down 7%. In theory, gold miners offer investors a leverage to gold prices, and a small upside move in gold should translate into bigger improvements for gold miners, at least for those with healthy operations.

However, this is not the case now. In fact, when looking at gold miners' stock charts, I identified only two equities with an established upside trend: Kirkland Lake Gold (KL), which has the strongest chart in the whole gold mining space, and Newmont Mining (NYSE:NEM), which is preparing to return to the strong upside trend established in 2016 after a consolidation in 2017. (Note that Harmony Gold Mining (HMY) is also looking to establish an upside trend following a period of consolidation.)

Let's look at Newmont Mining in more detail. The company is one of the biggest gold miners by production volume, together with Barrick Gold (ABX), which has also been on my focus list recently. At first glance, the first thing that differentiates Newmont Mining from its peers is its pristine balance sheet. The company finished 2017 with $3.3 billion of cash on the balance sheet and $4.1 billion of debt. With only $800 million of net debt, Newmont Mining is almost debt-free for an operation of its size. The debt schedule is very easy, with the majority of debt coming after 2035:

The company has a geographically favorable production mix, with most production and reserves coming from the U.S. and Australia. Of course, a miner of Newmont's size has had its own problems on the

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This article was written by

Vladimir Zernov profile picture
I'm a trader who trades both short-term and long-term. I started my career as a day-trader for a trading firm, but then turned to longer time frames and went on my own to manage my portfolio. I use technical analysis as well as fundamental analysis in my research.

Analyst’s Disclosure: I am/we are long EGO. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

I may trade any of the above-mentioned stocks.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (14)

After being a gold/mining stock investor for many years, my advice is to invest in dividend growth stocks. I can only say that my returns were mediocre and I would have fared better being in dividend growth stocks or even a total market index fund. I now own zero mining stocks after selling Billiton last year.
Grippa profile picture
LOL salt I m sure you will have time but better be quick a lot going on now and commercial production RNS imminent. Journalists visit the mine next week to might get some more endorsements after this! Good luck
Except for the miners. Maybe some of those souls never sleep well at night.

Any SA readers have any insight on how well Newmont takes care of their workers?
cal_doon profile picture
Vladimir, can you share your thoughts on lithium and cobalt miners? Thanks.
Vladimir Zernov profile picture
To me, ALB looks ready to rebound.
cal_doon profile picture
Thanks, I picked up a few and now they got really good news from the government allowing to increase a production.
billhouston profile picture
Read the info in the new carbon based batteries. Its a lithium killer.
Grippa profile picture
Grippa profile picture
Hummingbird resources is the best gold stock on the market by a country mile fully derailed and on a PE of 2 at present
Saltcreep profile picture
I hope that wasn't a real Freudian slip there.

But, shhhh, don't spread the word yet. I'm hoping to pick up some more Hummingbird soon (maybe even this afternoon after I get out of a disappointing foray into PPLT), and I'd like to buy it below 33p on the LSE, please.

Regarding Newmont, 'Sleep well at night stock' is about as good a description as I've come across for it. When I buy shares in the more volatile miners I will usually match my purchase with an equivalent NEM purchase.
billhouston profile picture
I see no help till the end of the year when the Trump impeachment starts, with inflation kicker and t-bills that will not sell.
mmkkgg profile picture
I hope so, I own sooooo many miners.
Goldcorp same story!
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