Newmont Corporation (NEM 4.08%) took a bit of a tumble today, down around 3.2% as of late morning. Now, you might think this is just the usual market jitters, and often you’d be right. But it’s tied to something a little more…involved. Specifically, the price of gold, which has decided to be uncooperative. And that, in turn, is linked to the Consumer Price Index (CPI), which, for the second month running, showed a rise of 2.4% in February. Numbers, numbers everywhere. It’s enough to make one long for a simpler time, like when bartering was the norm.
Gold, Silver, and the Curious Case of Inflation
There’s a perfectly good war going on over in the Middle East, which, historically, isn’t exactly bad for gold. It’s one of those counterintuitive things. People tend to think of gold as a safe harbor when things look a bit dicey, and the attacks on Iran did indeed give the price a little boost – 2.6%, to be precise. Though, thinking about it, “safe harbor” seems a rather grand term for a shiny metal. Still, it’s a tradition.
The problem is, war, as anyone who’s ever been near one can attest, is expensive. And this particular one is causing a bit of a squeeze on global oil supplies, pushing up fuel prices. The CPI has been steady the last two months, yes, but hovering stubbornly above the Federal Reserve’s 2% inflation target. The worry, you see, is that March’s figures will show a significant jump. And that’s where gold gets complicated.
When inflation starts to bite, investors sometimes decide that gold, which doesn’t pay interest (it just sits there, being shiny), isn’t such a great place to park their money. Bonds, which do pay interest – and increasingly more as inflation rises – start to look a lot more appealing. Hence, the dip. Gold is currently trading around $5,178 an ounce, down 1.2%, and silver isn’t faring much better, off 5.1% at $85 an ounce. It’s all rather cyclical, really. Like the seasons, but with more spreadsheets.
What This Means for Newmont
Newmont, as it happens, digs up not just gold and silver, but also copper, lead, and zinc. A veritable treasure trove, really. So, when the prices of these metals fall, it’s hardly surprising that Newmont’s stock takes a hit in the short term. It’s just basic economics, though sometimes basic economics feels anything but.
But looking a little further out, Newmont is trading at less than 19 times its trailing earnings, and only 16 times its forward earnings. That’s…reasonable. Analysts predict continued earnings growth, with profits in 2029 potentially more than double what Newmont earned last year. Which, if it happens, would be quite something.
So, all things considered, Newmont looks like a reasonable buy to me. Though, of course, I’m just an analyst staring at numbers. And numbers, as anyone who’s ever tried to do a tax return can tell you, can be remarkably misleading.
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2026-03-11 19:12