To The Moon

$Gold - main 2604(GCmain)$ When the price of gold surged past the all-time milestone of $5,000 an ounce with an annual gain of over 70%, the market’s attention became almost entirely fixated on this glittering safe-haven asset itself. Yet the real smart money may be shifting to the background—to the producers that turn underground ore into physical gold. In this historic gold bull market, Newmont (NEM), the world’s largest listed gold company, is proving with staggering financial results that it may offer more investment value than gold bullion itself.

Gold prices have climbed more than 18% year to date, breaking above $5,000 an ounce—a figure not even the most optimistic gold bugs would have dared to imagine just two years ago. But while retail investors hesitate to chase the rally and buy physical gold, Newmont delivered a near-perfect performance in 2025: it generated a whopping $7.3 billion in annual free cash flow, repaid $3.4 billion in net debt, and ended the year with a net cash position of $2.1 billion.

These numbers carry extraordinary significance. During a gold price uptrend, producers typically boast higher operating leverage than gold itself. As gold prices rise, the profit growth of gold mining companies—whose production costs are relatively fixed—will far outpace the gain in gold prices. Newmont is the perfect embodiment of this logic.

Why Newmont Stands as the Winner

As an industry giant with a $135 billion market capitalization, Newmont’s edge lies not only in its scale. Operating 12 mines across four continents, the company commands cost control capabilities and project reserves that small and mid-sized producers can hardly match.

Data shows that in 2025, Newmont’s core asset portfolio produced 5.7 million ounces of gold at an all-in sustaining cost (AISC) of $1,599 an ounce, while the average selling price soared to a staggering $3,498 an ounce. The massive spread of $1,899 an ounce forms the cornerstone of the miner’s exceptional profitability. In a booming industry cycle, this cost advantage is magnified exponentially, translating into abundant cash flow. What’s more noteworthy is that Newmont is not resting on its laurels. Flush with cash, it is advancing three major growth projects: Tanami Expansion 2, Cadia Panel Caves and Lihir Nearshore Barrier. These projects can be pushed forward without excessive borrowing, ensuring stable production and cost optimization in the coming years.

Looking ahead to 2026, Newmont forecasts gold production of approximately 5.3 million ounces, with the all-in sustaining cost edging up slightly to $1,680 an ounce. The cost increase stems mainly from production mix adjustments, the company’s forecast of an average gold price of $4,500 for the year, and higher sustaining capital expenditures. But the key variable is that the current gold price has already exceeded $5,000 an ounce, meaning Newmont’s actual earnings this year are highly likely to beat expectations once again. The company plans to invest $1.4 billion in development capital, focusing on the highest-return free cash flow growth projects.

Meanwhile, its annual dividend commitment of $1.1 billion is a done deal, with the per-share dividend raised from $0.25 in the previous quarter to $0.26—all thanks to the dilutive effect of its share repurchase program. Currently, Newmont still has $2.4 billion in unused repurchase authorization. Even if gold prices pull back in the future, the company, with its robust net cash position, can still enhance shareholder value by repurchasing shares at a low price. This financial flexibility to go on the offensive and defend its position makes it a choice with a favorable risk-reward ratio for investing in the gold sector.

How to Allocate Newmont Stock

Newmont’s stock currently trades at approximately 12.8 times its operating cash flow, a slight premium to its five-year average of 11.4 times. Given that gold prices are at an all-time high, this premium is still within a reasonable range. For investors, however, the key question is not whether to buy, but how much to buy. Professional opinions hold that Newmont is better suited as part of a diversified investment portfolio rather than a single concentrated bet. After all, the volatility of gold prices cannot be ignored, and producers’ stock prices tend to exhibit even greater elasticity.

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