Image source: Newmont Mining Corporation.
What: Newmont Mining Corporation's (NEM +2.75%) shares rose an impressive 21% or so in June. That caps a year-long rally that saw Newmont's shares advance over 110% through the end of June. Shift the start date of the upturn to mid-January, when gold really started to move higher, and the gain increases to about 150%.
So what: There are two big stories that pushed Newmont shares higher last month. The first is the most obvious: Gold prices rose about 9%. That's clearly good news for all precious metals companies. But it wasn't the only good news -- or the full story.
The other story that supported Newmont's shares in June was all about fear. In this case, fear of economic weakness. For example, Newmont rose about 9% after a weak jobs report in early June sent investors scrambling. That pushed up the price of competitors, too, including Barrick Gold (ABX +2.12%), which saw a roughly 13% advance.
The bad news, economically speaking, didn't stop there, either. The Brexit vote in late June increased investor concerns about the potential for economic troubles even more. Between June 23 and June 30, right after the U.K. voted to leave the European Union, Newmont and Barrick both advanced about 10%. Being viewed as a safe haven asset appears to have been a key underlying theme last month.
Now what: Gold shares can be very volatile. For example, despite the strong rally since mid-January, Newmont Mining's stock is still down some 35% since the start of 2011. That said, if you have a strong feeling about gold and/or the economic outlook, you might want to consider a deeper dive into Newmont. It's one of the largest miners in the world and has a stable base of assets in the United States that have very low costs. Just remember that investor sentiment can change quickly, and the strong upside that investors have benefited from so far this year could easily turn if gold prices falter and/or economic concerns subside.
