Why Gold Miners Fall Even After Record Profits

By Przemysław Radomski – fxEmpire

A share price looks ahead, and a record quarter looks back. Investors pay for the profits a miner will earn, and those profits depend on two numbers: the price of gold and the cost of producing an ounce.

In the third quarter, Newmont sold gold at an average of $4,317 per ounce, and its all-in sustaining costs were $1,454 per ounce, a margin of about $2,860 per ounce. For the fourth quarter, Newmont expects all-in sustaining costs of about $1,900 per ounce, mainly because of higher sustaining capital spending, and it also cited continued inflation, including higher oil prices. With gold near $4,000, the margin would be about $2,100 per ounce. The gold price would be about 7 percent below the third-quarter average, and the margin would be about 27 percent smaller.