Newcrest share price surges to 7-year high

The Newcrest Mining Ltd (ASX: NCM) share price has hit a 7-year high today on the ASX. Is it too late to buy?

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Newcrest Mining Limited (ASX: NCM) share price continues to surge higher today – the latest chapter in an incredible run since August 2018.

Although the ASX 200 (INDEXASX: XJO) and wider global sharemarkets are having a pretty rocky start to the week, the Newcrest price has made a fresh 7-year high of $28.76 this morning and is trading around $28.40 at the time of writing – up over 50% since last August.

Newcrest is a share that seems to do well when the market is storming ahead and even better when the market pulls back. So what is behind this surge? And can Newcrest shares climb higher?

What's behind Newcrest's share price gains

The gold price itself has seen a huge surge over the last 10 days. Gold spot prices were hovering around US$1,278 per ounce in the last week but this morning, gold is speeding towards the US$1,330 mark. Rapid price rises like this are uncommon and signal how jittery global markets really are. Additionally, even though the gold price in US dollars has seen these levels before, gold has never (ever) been this expensive in Australian dollars. When accounting for exchange rates, an ounce of gold will set you back around A$1,905, which is an unprecedented high.

Additionally, gold has always been viewed as a 'safe-haven' asset. With the China–US trade war getting worse by the day, the UK Prime Minister about to step down and tensions in the Middle East, you can see why nervous investors are bailing into gold and hard assets.

Newcrest has relatively low production costs, with a cost-base of $835 per ounce, so this price surge (together with the recent falls in the Australian dollar) would mean that Newcrest has likely never been so profitable.

Shares of other ASX gold miners are also hitting new highs. Northern Star Resources Ltd (ASX: NST) is swapping hands for over $10 a share for the first time ever, and Evolution Mining Ltd (ASX: EVN) has smashed through the $4 mark.

Foolish takeaway

If the gold price and our dollar stay at these levels, there may be some special dividends in the pipeline for Newcrest and other gold miners. Many investors believe there may be significant upside in the gold price yet, so its definitely a space to watch.

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Resources Shares

Female miner smiling at a mine site.
Resources Shares

Up 60% this year, this ASX 200 mining stock just smashed production records

Production surge headlines quarterly results.

Read more »

a man in a hard hat and high visibility vest smiles as he stands in the foreground of heavy mining equipment on a mine site.
Resources Shares

After lifting its price target, Macquarie now expects 36% upside from this ASX mining stock

The precious metals producer released better-than-expected production guidance.

Read more »

A miner in a hardhat and high visibility clothing makes a thumbs up symbol.
Resources Shares

4 reasons to buy Rio Tinto shares today

A leading expert forecasts strong growth potential for Rio Tinto shares.

Read more »

Man with rocket wings which have flames coming out of them.
Resources Shares

Why Macquarie expects this ASX All Ords copper stock could surge 38%

With costs coming in below expectations, this ASX All Ords copper stock could rocket higher over the coming months.

Read more »

Iron ore price Vale dam collapse ASX shares iron ore, iron ore australia, iron ore price, commodity price,
Resources Shares

Major miners up as China announces new mega project

Can a new mega-dam absorb iron ore oversupply?

Read more »

A young man sits at his desk with a laptop and documents with a gas heater visible behind him as though he is considering the information in front of him. about the BHP share price
Broker Notes

Leading broker has just downgraded BHP shares. Is it time to sell?

Macquarie sees little upside. But why?

Read more »

A young woman wearing a blue blouse with white polkadots holds her phone up with an intrigued and happy look on her face as she reads some news.
Resources Shares

3 reasons why the BHP share price could be a buy

Here are my optimistic thoughts on BHP.

Read more »

mining asx shares represented by miner writing report on clipboard
Resources Shares

This ASX 200 miner is ramping up copper output as prices reach all-time highs

Copper production leads quarterly update.

Read more »