The Newmont Effect Will Be Very Bullish For Gold Stocks

The Newmont effect is the catalyst that will start a rush of generalist investors into the gold stocks. When I listen to generalist investors talk about the gold stocks, I often hear them say that gold is doing great, but when will the gold stocks join the gold bull market. That tells me that when they look at gold stocks, they look at the ETFs to gauge sentiment.

There are serious problems with using that as a guide on sentiment for gold mining stocks. One of them is that the ETFs are composed of the good, bad and ugly, which for some reason makes investors believe that diversification like this is somehow less risky.

I don’t think it is at all, it is more of a recipe to underperform the moves in gold and means that investors would be better off just owning gold. When the entire reason for owning gold stocks is that you want torque to the price of gold, diworsification doesn’t accomplish that goal.

Other issues to consider are which companies make up the ETFs and the weighting of the companies in them. Take for example the GDX. Its top five holdings are Newmont, Agnico Eagle, Wheaton Precious Metals, Barrick and Franco-Nevada. Newmont and Agnico Eagle represent around 12% each of the entire fund for a total of 24%. Wheaton Precious Metals, Barrick and Franco-Nevada average close to 7% each. So in those five companies, they represent nearly half of the fund.

Newmont and Agnico Eagle are pretty much pure plays on gold mining, yes they have other metals in the mix, but for the most part, they are major gold miners.

Wheaton Precious Metals is a streaming company that is focused on gold and silver streams. They help mines that are primarily base metal miners that also have byproduct gold and silver get built by providing capital, for that they get the gold and silver that comes out at a discount to the spot price. It is a great business, but they are not a major gold miner.

Barrick is in the process of turning from a gold miner into a gold and copper miner so they are moving away from being a gold focused major miner. It is also important to point out that plenty of their long-term investors own it for the gold mining business.

Franco-Nevada is a royalty and streaming company, they truly invented the royalty business and are extremely well run with a fantastic business model. They make their money from owning royalties and streams, primarily gold and silver, as well as other metals. It is also an impressive investment opportunity, but they are not a major gold miner.

If you consider the top 5 holdings in the GDX, two are primarily focused on gold mining, one is a streamer, one is becoming a gold and copper miner and the other is a royalty and streaming company. Collectively, they have a big influence on the performance of the fund that is supposed to give investors exposure to major gold miners.

For generalist investors, the two long-term household names when it comes to gold mining are Newmont and Barrick. When investors think of gold miners, those are the two top of mind companies. Newmont and Barrick significantly underperformed several of their peers in 2024.

Agnico Eagle has been a rockstar over the past year as gold went from the bottom left of the chart to the top right during 2024 and 2025, and they significantly outperformed gold’s performance. While Newmont and Barrick have been laggards compared to Agnico Eagle.

With Newmont, reasons for their underperformance have been partially due to controls on their cost of producing gold which is higher than the average cost of major gold miners. Plus, they were divesting their non-core gold mines, which went much better than expected because they got over double what they thought they would when they put them up for sale.

Additionally, they were digesting the takeover of Newcrest, and just like takeovers in any industry, it takes time to blend the companies and for the synergies to show up on the bottom line.

I recently made them a pick because they are getting on top of their costs, and had very successful sales of non-core gold mines so they can now focus on their Tier-1 gold mines, and they have fully digested Newcrest. I made them a pick before they reported their first quarter numbers, and they are up nicely since I made them a pick.

Barrick has had issues with their costs of production and building mines, plus serious problems at current mines. I won’t go into all the details, you can easily find them by doing a Google search. Their various issues are why they have underperformed.

I’m very bullish on copper and think in the long-term, they have a great strategy to increase their exposure to copper mining. I can see myself making them a pick in the future, but, first I will want to see them get on top of their issues in the gold mining business and then also move down the path to increasing their copper production.

It is fair to say that Newmont and Barrick are both turnaround plays, in the case of Newmont, I believe they have turned the corner and Barrick has a ways to go before they can say the same.

So, of the five top holding of the GDX, which is what many generalist investors look at to gauge the performance of gold miners, two are turn around plays, one is a streamer and another is a royalty and streamer.

Agnico Eagle has been the focus for my pick of a major gold miner since early 2024, and they have outperformed GDX and gold by a wide margin. An investor that wanted exposure to a major gold miner that is a low-cost producer relative to other majors gold miners (by a few hundred dollars per ounce) that is a free cash flow machine as gold has performed exceptionally well, Agnico Eagle was a tremendous pick. They are the best in breed when it comes to low-costs of production relative to their peers, and at growing their free cash flow and cash on their balance sheet. As can be seen in their latest quarterly report put out after the close of trading on April, 24, 2025.

It is beyond me why an investor would want to invest in an ETF, made up of the good, bad and ugly, which is supposed to track major gold miners. When they could have just owned the best in breed gold miner (Agnico Eagle) and been rewarded with a return of over three times the percentage gain in the price of gold.

Even worse, is why generalist investors would consider that ETF as an indicator of the health of great gold miners. But, that is what has happened and why generalist investors have not been enthused about getting into the gold miners.

Which brings me back to the catalyst that I believe will get more excited about owning gold miners. In the GDX, over 12% of the fund is in Newmont and as I mentioned earlier I think they have turned the corner on their turnaround and have already started a significant breakout of late. Now, they are perfectly positioned to turn from a laggard into a rockstar performer. Which will help juice up the performance of the GDX.

Despite my misgivings about generalist investors focusing on the GDX to assess the performance of gold mining stocks, that won’t change. When they think of gold stocks, it will continue to be one of the first places they look. If I am right that Newmont is on the verge of exceptional performance, it will help drive the GDX higher by having one of the marque names for gold miners to the generalist investors having remarkable performance.

Over the next year and well beyond, I expect to see gold continue to make a series of new record highs, that should get it to, and over, $4000 per ounce. In that environment, Newmont will be a free cash flow machine and see its stock go from the bottom left of the chart to the top right.

The Newmont effect is primed to bring many generalist investors into the gold stocks. Which will filter its way down the food chain into the gold mine developers with high-quality projects and explorers with important discoveries.

Down the gold stock food chain, the developers with high-quality projects and explorers with important discoveries are absolute coiled springs. Many of them still have valuations that are unduly cheap and pricing gold in the ground as if gold was half its current price and has not even started to price in that it is going much higher.

When the generalist investors figure the gold stocks out, the menu of quality all along the food chain is tiny, so it will be like the little golden boy trying to hold the dam from bursting with his finger.

All the best,

Allan Barry Laboucan