Gold Is Skyrocketing: Is the World's Largest Gold Mining Company Still a Buy After Soaring 40% in 2025?

Gold's value dates back to humankind's earliest years. It remains a safe-haven asset to this day.

The heightened uncertainty in the stock market has caused a literal gold rush. Gold, priced in U.S. dollars, has soared nearly 24% over the past year. But zoom out, and gold is up over 900% since 2000, trouncing the S&P 500 index's 489% over that stretch. Newmont Corporation (NYSE: NEM), the world's largest gold mining company, has surged over 40% year-to-date.

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Should you invest in Newmont Corporation today, or has the opportunity already passed? Here is what you need to know.

Here is what it means to buy gold mining stocks like Newmont Corporation

Gold is a precious metal that comes from the ground. When you purchase physical gold or a gold-backed ETF, you own some of the existing gold supply. Buying gold mining stocks gives you equity in the reserves, gold that is still in the ground. Newmont is the world's largest gold company, though it also produces copper, silver, zinc, and lead.

Newmont's operations span the globe, encompassing both mining projects that it directly owns and operates as well as those it indirectly manages through joint ventures and other partnerships. Newmont Corporation is similar to a company that drills for oil. Its financial performance is heavily dependent on two factors:

1. The quantity of gold and other metals it produces.
2. The prevailing market prices for these metals.

Gold's boom-and-bust history has implications for investors

People invest in gold for multiple reasons. Its long-standing value and limited supply can make gold a popular hedge against inflation. Additionally, gold is often in high demand during uncertain times, and it is fair to say that the Trump Administration's tariff announcements in early April have clouded the market's outlook, even if the U.S. has since walked back or paused some of these policies.

Historically, gold prices have gone through boom-and-bust cycles. You can see this pattern repeat several times between the late 1970s and today:

Gold Price in US Dollars data by YCharts

Although the long-term direction is upward, gold prices have not been consistently reliable over extended periods of time. It helps explain why Newmont Corporation has returned a total of just 240% since 1989. Nobody knows what the future holds, but history shows that simply buying and holding Newmont Corporation doesn't produce great results.

The timing of when you buy is crucial.

This gold rush could be nearing its end

Gold has skyrocketed over the past year, setting new all-time highs by a wide margin. Again, nobody can predict short-term asset prices. However, there are some signals that gold may be at or nearing its short-term peak.

People are afraid. The VIX index, which measures anticipated stock market volatility, recently spiked to its third-highest level on record. The U.S. Index of Consumer Sentiment has plunged to near its lowest-ever figures. Meanwhile, data from Google Trends indicates that search traffic for queries such as "how to invest in gold" and "gold stocks" has increased significantly in recent weeks.

Gold is a hard asset, but it doesn't have an underlying business with earnings to drive its value. It depends on market forces. That means peak fear could also coincide with a peak in near-term demand for gold and, thus, gold prices.

Ironically, Newmark Corporation looks cheap. The stock's price-to-earnings ratio is only 15 times earnings, but the company earned $3.48 per share last year, benefiting from higher gold prices. Newmont earned only $1.57 per share in 2023. It's often the worst time to buy a cyclical stock like Newmont during its peak earnings when the valuation appears cheap. Once gold prices fade, earnings will, too.

The timing is anyone's guess, but it appears Newmont Corporation could be closer to a top than a bottom, so now is not the time to buy the stock.

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Justin Pope 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.