What happened to the Northern Star (ASX:NST) share price in 2021?

The company's shares struggled to make a positive impact last year

| More on:
A youngA young boy dressed as a nerd wears a makeshift helmet and invention which uses many calculators to compute his solutions.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Northern Star Resources Ltd (ASX: NST) share price failed to generate positive returns for shareholders in 2021. The stuttering price of gold continued to weigh down on investor sentiment, causing a sell-off in the gold miner's shares.

Over the course of 2021, Northern Star shares lost around 26%, making it one of the worst performers across the sector. In comparison, the share price of fellow miner Newcrest Mining Ltd (ASX: NCM) lost just 5% across the same time frame.

At yesterday's market close, Northern Star shares were up 0.66% to $9.10 apiece. It's worth noting its shares have been on a sharp decline since early November, down 14%.

Why did the Northern Star share price stumble?

The Northern Star share price has fallen drastically since the deterioration of the spot price of gold last year.

Investors traditionally flock to the yellow metal as a safe-haven asset when there is uncertainty in the market. However, with the world moving past COVID-19 along with renewed investor confidence in the US dollar, gold has lost its value.

In the past year, the price of gold soared close to the US$2,000 barrier but has since fallen away. Currently, an ounce of gold is fetching around US$1,792.00. That's 8% down on the US$1,951.34 it was fetching at the start of last year.

The United States Federal Reserve indicated its intent to raise interest rates at least 3 times in 2022. That was because inflation had accelerated to 6.9%, the highest rate in nearly four decades, and unemployment levels were down.

Rising interest rates inversely drag down the price of precious metals, particularly gold, and it appears investors are bracing for the worst.

Nonetheless, Northern Star managing director and CEO Stuart Tonkin recently made an on-market transaction, buying more of the company's shares.

The head honcho picked up 50,000 Northern Star shares at an average price of $8.86 per share or $443,000 worth.

The sale increases Tonkin's existing holding by 4.2%, taking advantage of the recent share price weakness.

What do the brokers think?

A number of brokers believe the Northern Star share price is currently trading at a bargain price.

Last month, multinational investment firm Macquarie Group Ltd (ASX: MQG) improved its outlook on Northern Star shares by 15% to $15 per share. Based on Friday's closing price, this implies an upside of a sizeable 65% for investors.

On the other hand, Swiss investment firm UBS lowered its outlook on the company's shares by 21% to $11.20. While the broker reduced its assessment on Northern Star, it still sees value in the gold miner. The price target represents a potential upside of 23% from where it trades today.

Motley Fool contributor Aaron Teboneras owns Northern Star Resources Limited. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Resources Shares

a sad looking engineer or miner wearing a high visibility jacket and a hard hat stands alone with his head bowed and hand to his forehead as he speaks on a mobile telephone out front of what appears to be an on site work shed.
Resources Shares

Down 14% in 2024, why is the BHP share price sliding again today?

ASX 200 investors are bidding down the BHP share price on Wednesday.

Read more »

A mining employee in a white hard hat cheers with fists pumped as the Hot Chili share price rises higher today
Resources Shares

These ASX 200 mining stocks could rise 40% to 50%

Analysts think these miners are dirt cheap at current levels.

Read more »

Image from either construction, mining or the oil industry of a friendly worker.
Resources Shares

Fortescue share price leaps 5% as electric machinery makes a milestone

Fortescue is charging ahead with its electric mining ambitions.

Read more »

rising mining asx share price represented by happy woman miner in hard hat
Resources Shares

Why the BHP share price crushed the benchmark this week

BHP shareholders enjoyed a rewarding week.

Read more »

A man wearing a hard hat and high visibility vest looks out over a vast plain where heavy mining equipment can be seen in the background.
Dividend Investing

Here is the profit forecast to 2026 for BHP shares

Let’s unearth how much profit this miner could make.

Read more »

Female miner standing next to a haul truck in a large mining operation.
Resources Shares

Is the worst of the selling now over for ASX iron ore shares?

ASX iron ore giants like BHP, Rio Tinto and Fortescue rebounded this week after falling hard in 2024.

Read more »

Three satisfied miners with their arms crossed looking at the camera proudly
Resources Shares

Why are ASX 200 mining shares smashing the benchmark on Wednesday?

Rio Tinto, BHP and Fortescue shares are all charging higher today.

Read more »

Two miners standing together.
Resources Shares

Why is the South32 share price getting battered today?

ASX 200 investors are bidding down South32 shares today.

Read more »