Last week, leading gold producer Newmont Mining (NYSE:NEM) took a bold step that led gold bugs to give each other hugs. The firm bought back all of its gold hedges, which means there's no longer a set floor or ceiling on Newmont's future gold sales. This move indicates that the firm is very confident about the future price of gold. That, or Newmont is desperate to resuscitate its stock after a slew of stumbles.

Investors who want exposure to gold can simply buy and store the physical metal, or they can invest in shares of a fund that does this for them, such as the streetTRACKS Gold Trust (NYSE:GLD) ETF. In my view, the only reason to invest in a gold miner is to gain more leverage to the price of gold. Thanks to all the operational, regulatory, and environmental risks inherent in the business, it's simply not worth the extra risk to invest in a producer without that leverage. This is partly why popular gold-mining companies like Yamana Gold (NYSE:AUY) don't hedge their production.

In an effort to be conservative, Newmont was depriving investors of that basic leverage requirement. On the former CEO's watch, the market cap quadrupled while the gold price more than doubled.

That seems inadequate, and it compares unfavorably to the value created by large competitors Goldcorp (NYSE:GG) and Gold Fields (NYSE:GFI) over the same period. Also, while Newmont's not alone in this regard, it's still notable that year to date, the company's share price has fallen while bullion has risen modestly. It's not surprising, then, that since CFO Richard O'Brien took over the top executive spot on July 1, he's quickly initiated significant changes to the firm's operating structure.

Newmont announced that it's eliminating not only its hedges, but its merchant banking segment as well. This unit does not address the company's most pressing issues of lowering operating costs and reversing production declines. It's history, and so is any chance of the company reporting a decent quarter. The writedown of goodwill assets is going to contribute to an ugly earnings-per-share figure. If you deem these steps to be prudent, rather than a risky gambit to regain favor with investors, then you may get a nice buying opportunity when results are announced in a few weeks. I, for one, will be shopping elsewhere.

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Fool contributor Toby Shute doesn't own gold bullion, jewelry, teeth grills, or shares of any company mentioned. The Motley Fool's disclosure policy follows the Golden Rule.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.