MENU

Why Newcrest Mining is up 21% in three days

Shares in Newcrest Mining (ASX: NCM) shot up 21% in just three days last week, ending the week up 13% and recovering some of the 53% the shares have lost over the last 12 months. There are several reasons likely to be driving the rise.

One big factor that sent buyers clamouring back into the company is the rise in gold price towards the end of last week. The gold price jumped in response to a statement by Federal Reserve Chairman Ben Bernanke that the US will continue with its programme of quantitative easing. Gold is viewed by many as a hedge against quantitative easing and the resulting spurt in inflation.

Newcrest investors were also able to get excited by the falling Aussie dollar which will significantly shield Newcrest from the fall in gold price. The Australian dollar is down 11% against the US dollar this year and like most commodities gold and cooper are priced in USD.

Some of the smaller gold miners also saw jumps in their share price. Shares in Silver Lake Resources (ASX: SLR) climbed 3.31% while Perseus Mining  (ASX: PRU) rocketed 13.3%.

Foolish takeaway

Last week saw Credit Suisse downgrade its rating for Newcrest Mining from an “outperform” rating to “underperform”. It didn’t deter investors however who will be hoping the quantitative easing party continues and spurs a recovery in demand for gold.

Avoiding gold stocks? How about high-yielding ASX shares? Get 3 Stocks for the Great Dividend Boom in our special FREE report. Click here now to find out the names, stock symbols, and full research for our three favourite income ideas, all completely free!

More reading


Motley Fool contributor Regan Pearson does not own shares in any companies mentioned in this article.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.