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Why the Newcrest share price fell 7% in November

Although the S&P/ASX200 (INDEXASX: XJO) has been going gangbusters and hit a new all-time high last month, not all stocks are feeling the love.

The Newcrest Mining Limited (ASX: NCM) share price is one such stock – falling from around $32.16 at the start of the month to $30 at the time of writing. That’s a month-on-month loss of 6.7% for the ASX’s largest gold miner. NCM shares are now at their lowest levels since early June with the Newcrest share price down 22.8% from the 52-week high of $38.87 that was set in August.

Why have Newcrest shares tanked this month?

Newcrest, like any mining company, is largely dependent on the price of the commodities it mines when it comes to profitability. As it happens, the price of gold has also had a rough month. Gold was asking US$1,510 an ounce back at the start of November. This translated into $2,185 in our local Aussie dollars. Fast forward to today and gold is going for US$1,461.55 ($2,157) per ounce – a drop of 3.3%.

Since gold miners are leveraged to the price of gold itself, it makes sense that Newcrest shares have been hammered on these movements.

Gold is viewed as a ‘safe haven’ asset that investors typically flock to in times of uncertainty or volatility. Since markets both in the US and in Australia have been hitting fresh all-time highs, I suspect the increased appetite for risk that such moves often bring has reduced the appeal of safe haven assets like gold for the time being.

Is it time to buy Newcrest?

That depends on your views on where gold is going next. Although Newcrest shares have certainly come off the boil, I wouldn’t personally describe NCM being in the bargain bin just yet – especially if you consider this stock’s 52-week low is $20.37. Still, I’ll be watching this space closely from now on, and might be interested if Newcrest drops any further from here.

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Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.