Should You Buy Newmont Stock After a 60% Rally in a Year?

Newmont shares have risen 59.8% over the past year, supported by higher realized gold prices, operational performance and a growth-project pipeline, but Zacks maintains a Rank #3 (Hold). Q2 2026 free cash flow rose 29% year over year to a record $2.2 billion, with roughly $13 billion of liquidity and $3.4 billion in net cash; the company has also returned $1.9 billion to shareholders since April 23, 2026. Offsetting these strengths, 2026 gold production is forecast to decline to 5.26 million ounces from 5.89 million in 2025, while AISC is expected to rise to $1,680/oz from $1,358/oz, and earnings estimates have moved lower.

Analysis

NEM's key debate is no longer gold-price leverage but operating leverage: lower volumes and a sharply higher cost base make incremental cash flow unusually sensitive to bullion while reducing downside protection if gold weakens. At roughly $4,300/oz gold and $1,680/oz AISC, the implied mine-level margin remains exceptional; however, each $100/oz decline removes roughly $525 million of annual pre-tax operating margin on 5.26Moz production before royalties and tax. The near-term risk is a third-quarter cost miss, since oil, sustaining capital and low-volume absorption can compound rather than offset each other.

Relative performance should favor AEM over NEM over the next 1-3 months if bullion is range-bound. AEM has historically earned a premium for operational consistency and reserve quality, whereas NEM's forthcoming production growth requires execution across multiple capital-intensive projects; that makes NEM's current discount insufficient compensation if consensus estimates continue to fall. ABX is the more direct relative short only if its own operational delivery remains stable, as a weaker U.S. dollar or renewed geopolitical bid for gold would likely lift all three miners.

The non-obvious catalyst is capital-allocation flexibility: NEM's cash-rich balance sheet and remaining repurchase authorization can cushion a valuation derating, but buybacks at elevated gold-cycle earnings risk becoming less accretive than accelerated debt retirement or selective project deferral. Over 6-18 months, successful ramp-up of Ahafo North and advancement at Cadia/Tanami would reverse the volume-cost narrative; until then, the equity behaves more like a high-beta gold proxy with an execution discount. Falsification of the cautious view would be third-quarter AISC below guidance, production above the current run-rate, and management maintaining full-year output guidance without further capital inflation.

Key Decisions for Investors

• Do not add outright NEM after the rally; maintain only a benchmark weight until third-quarter results clarify unit-cost trajectory. Reassess long exposure if gold holds above $4,300/oz and NEM demonstrates AISC below $1,680/oz guidance.
• Implement a 1-3 month relative-value trade: long AEM / short NEM in equal dollar amounts. Target 8-12% relative return from NEM estimate cuts and execution uncertainty; exit if NEM raises production guidance or AEM reports a material operational disruption.
• For existing NEM longs, buy 3-6 month downside protection via NEM puts or collars around the next earnings date rather than selling core exposure. The principal downside trigger is a gold break below $4,100/oz combined with higher oil prices, which would compress margins and likely force further 2026 EPS revisions.
• Monitor gold, diesel/oil costs, and quarterly sustaining-capex guidance as a three-factor alert. A sustained gold move above $4,650/oz would overwhelm company-specific cost concerns and argues against the NEM short leg of the pair trade.