Newmont Corp. in 5 Years: Boom, Bust, or Something Better?
Key Points
The long-term outlook for gold is positive, but near-term risk remains.
Newmont's strategy makes it more sensitive to swings in gold prices.
Newmont Corporation's (NYSE: NEM) strategy of focusing on concentrated gold investments raises several interesting considerations for long-term investors. First, there's the price of gold, its primary source of revenue. Second, the company's strategy in maximizing profitability from its production. Third, how that strategy impacts its upside and downside exposure to the price of gold.
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The confluence of these three factors will guide the company's boom-and-bust or other scenarios over the next five years. Let's have a closer look.
Newmont's strategy
Its strategy is clear. Divest its non-core assets and focus on investing in its Tier 1 gold assets, such as its mines in Papua New Guinea, Australia, and Ghana. The strategy of increasing production of higher-quality assets and eschewing lower-quality ones has its downsides and upsides.
Concentrating investment in fewer assets increases the risk of a one-off issue, such as a mining failure, a labor strike, or a political event. It also means Newmont is more exposed to the downside risk of a fall in gold prices, as it becomes harder to cut marginal costs in response to a decline in gold prices when capital is committed to fewer, larger mines rather than a collection of smaller ones.
On the other hand, the company's upside exposure is increased because fewer, higher-quality mines imply a focus on low-cost assets that can generate significant margin expansion when gold prices rise.
Ultimately, Newmont's strategy is likely to increase its profit sensitivity to gold prices. That might not suit more conservative investors, who tend to be agnostic about gold's price direction. However, it will please investors seeking exposure to rising gold prices.
Image source: Getty Images.
The outlook for gold
I've discussed the medium-term outlooks for both gold and silver previously, and many of the arguments are even stronger now. It looks like a case of near-term lower to go and long-term higher in 2026.
The "near-term lower" argument is based on a few factors. There's clear evidence of higher prices causing demand destruction in the jewelry end market, and central bank buying appears to have taken a breather in 2026, but the long-term drivers of demand remain in place.
In addition, the massive increase in demand for gold for investment in 2025 (up to 2,175 tons from 1,185 in 2024), according to the World Gold Council, implies there's a lot of speculative money in the trade. It's the sort of money that could easily flow out quickly given any kind of correction in the price of gold.
Image source: Getty Images.
Longer-term higher
That said, the underlying long-term trends behind demand for gold remain in place. Ever since the financial crisis of 2008-2009, there's been a clear trend toward an increase in the share of gold held in official reserve assets (from 6% in 2008 to 18% in 2024). According to the National Bureau of Economic Research, gold has now "overtaken the euro as the second most important international reserve asset."
At the same time, there's been a steady downward drift in the percentage of U.S. debt held overseas (from 56% in 2008 to 33% at the end of 2025).
These trends suggest a sustained shift in diversifying away from U.S. debt and toward gold in the global monetary system. That's bullish for gold, and if it continues, then the price of gold is likely to move higher. That would be great news for Newmont's strategy and its investors.
Lee Samaha has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.