Up one day and down the next, Newmont Corporation (NYSE: NEM) stock must be frustrating for investors — but it’s actually pretty easy to explain.
Newmont Mining mines gold (also mines copper, silver, zinc, and lead). When the price of gold rises, Newmont stock tends to rise; when the price of gold falls, Newmont stock tends to fall. Today, gold prices are falling, and Newmont stock is following them down: 5.5% as of 10:30 a.m. ET Tuesday.
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After hitting an all-time high of $5,419.80 per ounce on Jan. 28, gold prices tumbled to almost $4,500 in early February, according to data from TradingEconomics.com. Gold moved back above $5,000 on Feb. 8, slipped below it Feb. 12, then up again, then down again. Today, gold sits at $4,860.
Newmont’s silver holdings aren’t helping with the volatility. Like gold, silver prices peaked on Jan. 28 at $116.58 per ounce. Silver prices fell to $66, then bounced back above $80 — which appears to be a magic number for the metal. Again, prices passed above $80 on Feb. 7 and below $80 on Feb. 12. What’s different here is that silver prices haven’t recovered since, remaining well below $80.
Today, silver costs $72.70.
What’s next for Newmont stock? We’ll find out on Thursday, when Newmont reports Q4 earnings.
Analysts predict Newmont will earn $2.02 per share for the quarter, and $6.46 for the year. At today’s $119 share price, that works out to an 18.4 price-to-earnings ratio on a stock that — analysts say — will grow earnings 32% annually over the next five years.
Earnings day is getting closer, and Newmont stock’s getting cheaper. Invest accordingly.
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