RE:The Generalist Investors are Taking Notice and Coming In A rising gold price increases the miners’ revenue while operating costs (mainly labor and fuel) are flat to falling. The result? Widening profit margins at a time when other sectors from transport to hospitality to real estate are seeing profits evaporate.
So gold miners win twice, once in nominal terms as their earnings rise, and once in relative terms as their earnings outperform everyone else’s.
When the media figures this out, the coverage will be catchy. Here’s a very early and relatively staid example:
Newmont, the world’s largest gold miner, reported a more than ninefold rise in earnings in the first quarter thanks to higher gold prices and increased production from newly acquired mines.
The Colorado-based company said net income had risen to $822m in the three months to March 31, from $87m in the same period a year earlier.
The gold price is up 12 per cent since the start of the year as investors seek haven assets while the coronavirus crisis wreaks havoc in other markets.
Revenues in the quarter rose 43 per cent to $2.58bn. The company said the average realized price for its gold had risen by $291 an ounce from a year earlier to $1,591 a troy ounce.
Shares in Newmont have risen 40 per cent this year to trade at $58.32 on the New York Stock Exchange.