Newmont Stock Jumps 34.5% in August, and Gold's Rally Could Take It Higher

Shares in Newmont Corporation (NYSE: NEM) rose 34.5% in August, according to data from S&P Global Market Intelligence. The move comes amid rising gold prices and positive news on the administrative and operational fronts regarding the resolution of a dispute with Barrick Mining Corporation (NYSE: B). In addition, I would argue that the appeal of gold as a safe-haven investment increased throughout the month.

Newmont's eventful month

The price of gold rose throughout the month, and given the operational leverage miners have to commodity prices, it's not surprising that the market bought up the stock and took it sharply higher in August.

Gold Price in US Dollars data by YCharts

Still, the increase in gold prices is not a stock-specific issue, as many other gold miners would have benefited as well. The main operational and administrative plus for the month came from the agreement with Barrick Mining regarding their Nevada Gold Mines joint venture, announced on Aug. 10.

The two companies agreed that Newmont would pay Barrick $1.95 billion to include certain Barrick assets in the joint venture. Furthermore, Newmont consented to Barrick's intended initial public offering (IPO) of its North American gold assets. The resolution of the dispute helps Barrick achieve its strategic objectives and derisks Newmont's stock as well. It also allows the joint venture to generate operational synergies by adding the new assets, thereby increasing the value of Newmont's 38.5% stake.

Bigger picture considerations for Newmont Corporation

Turning to the more contentious part of the argument, the persistently high U.S. government bond yields through the month are arguably one reason why gold and gold mining stocks have come into favor. Historically speaking, rising bond yields are bad for gold because the yield on a safe asset (U.S. debt) rises relative to gold's yield, which is zero.

Image source: Getty Images.

However, what if rising U.S. government yields are due to increasing skepticism over government debt levels? It's a legitimate question given that U.S. public debt topped $40 trillion this month and Treasury Secretary Scott Bessent is actively intervening in the markets to try to reduce U.S. Treasury yields. Moreover, continued geopolitical conflict may well cause global central banks to prefer holding gold over U.S. Treasuries -- a long-term trend that supports the price of gold.

While these factors are debatable, enough market participants believe in them to drive gold prices higher and, in turn, Newmont Corporation's share price.

Lee Samaha has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.