Where sentiment and reality diverge, Fools know to seek opportunity.
Today, the collective sentiment surrounding gold seems to be a combination of panic and disgust, neither of which has any basis in reality. Every bull market experiences corrections and periods of consolidation, and this correction remains less severe than the one that began in May 2006, when the price of gold fell by more than 20%. We all know where the price of gold has gone since then.
Newmont brazenly removed all its gold hedges last year, joining fellow megaminer Goldcorp
When I last wrote about Peruvian miner Buenaventura
More importantly, a new gold mill at Yanacocha will start commercial production in the second quarter, and is expected to improve gold recovery rates by 50% and silver recovery rates by 300%.
While I recommend intermediate and select junior producers at this stage of the bull market for gold, Newmont has certainly impressed me with this quarterly result. We still must keep an eye on ore grades at some of the company's more mature projects.
But with the handcuffs of hedging removed from the books, and gold forecast to continue its historic run, Newmont appears set to climb new heights.