Newmont Mining shares jumped 7.9% on Wednesday to $125.08 after the U.S. Treasury Department announced a bigger bond buyback program, pulling long-term yields lower and lifting gold prices. The move overshadowed a minor asset sale Newmont made to a smaller Canadian miner.
Shares of Newmont Mining (NEM) rose 7.85% on Wednesday, closing at $125.08, up $9.10 on the day. The world's largest gold miner had no major company-specific news to explain the jump.
Treasury's bond buyback lowers long-term yields
Longer-dated Treasury Bond yields had climbed to multi-decade highs in recent days. Higher long-term yields tend to reduce the value of assets that don't pay cash interest, including gold.
This morning, Treasury Secretary Scott Bessent's department announced at least a doubling of its Treasury Bond buyback program for long-dated Treasuries. The signal suggested the Treasury would buy back longer-dated bonds at a discount while selling shorter-term bills and notes to fund the purchases. That approach may put the Treasury at greater risk of short-term inflationary spikes, but it drove long-term yields lower today, and lower long-term yields tend to lift gold prices.
A minor divestiture, a much bigger stock move
Newmont did have one piece of company news: it agreed to sell an undeveloped gold project to StrikePoint Gold for $70 million, plus an additional $50 million contingent payment tied to future milestones. For a company with a $122 billion market cap, the sale is relatively inconsequential next to the gold-price-driven rally. Newmont had already reported its second-quarter earnings in late July.
Newmont as a defensive gold play
Newmont trades around 13 times this year's earnings estimates and carries a 0.9% dividend yield, positioning it as one of the blue-chip mining names that defensive investors use to gain exposure to gold prices. Even so, like all gold miners, Newmont remains a leveraged bet on gold prices, which cuts both ways and carries significant downside risk if gold prices fall.
Source: The Motley Fool
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