Newmont Mining (NEM) is THE bluest chip of mining stocks, there is literally none better. So with Gold rallying very strongly so far in December is the stock under or overvalued?
When Gold was at $400 the company stated its reserves were around 100 million ounces
With 100m ounces and a stock price around $47.50 an investor is paying $208 an ounce for its proven reserves plus costs of $240
So 1 ounce of gold costs $448 as per the stock valuation taking into account NO other factors such as the company's land bank
Newmont for example has mega tar sand holdings in Canada
Back in 2004 when Gold was at $450 Newmont's stock price was at $50 (basically where it is at the moment)
The stock price can therefore be considered underpriced in relation to the spot bullion price
And this is without known reserves being marked higher due to a likelihood of increased exploration on the back of the metal's strong performance
Right now (as long as Gold stays above $500) we think the share price should be nearer $60 and has a shot at reaching $75 on further upside action in the physical metal
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