If gold is regarded as a ‘safe-haven’ asset, why is the Newcrest share price still tumbling?

Why hasn’t gold and gold miner Newcrest been a better safe haven for ASX investors?

| More on:
plummeting gold share price

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

Key points

  • Gold is often touted as a safe haven investment 
  • This reputation can also extend to gold miners, like Newcrest Mining 
  • So why haven't Newcrest shares proved a more effective safe haven over the past month? 

It’s been another rough and tumble kind of day for ASX shares. As it currently stands this Wednesday, the ASX 200 is pretty much flat after spending most of the day in the red so far.

This latest move puts the ASX 200’s losses over the past month alone at a painful 6% or so. So it might come as a surprise to some investors to hear that the Newcrest Mining Ltd (ASX: NCM) share price is also falling today. And by far more than the index too.

Newcrest shares are currently going for $24.86 each, down a nasty 0.84% so far today. Perhaps even more surprising is the fact that Newcrest has given up almost 11% over the past month, a significant underperformance of the ASX 200. I say surprising because gold, and gold miners like Newcrest by extension, have a well-developed reputation as ‘safe-haven’ assets. In other words, they are supposed to be counter-cyclical investments that protect an investor’s portfolio during times of fear.

Well, we are certainly in a fearful market right now. That’s just going off of the severity of the ASX 200’s losses over the past month. And yet Newcrest has been a drag on the ASX 200, rather than a saviour. What gives?

Why have gold miners like Newcrest been struggling?

Well, we only have to look at the gold price itself to understand why the Newcrest share price has been wobbly. A month ago, gold was being priced at around US$1,950 an ounce. In mid-April, the yellow metal even got close to US$2,000. But gold has slipped significantly since then. Today, it is only being priced at just under US$1,840 an ounce.

So has gold (and gold miners like Newcrest)’s role as a ‘safe haven’ now been debunked?

Not according to Chris Watling of Longview Economics. As we covered last month, Watling argued that it is the long term that investors should look to with gold. Here’s some of what he said:

We would argue, though, that gold has been remarkably resilient… While there’s strong evidence that gold is an inflation hedge over long periods of time, short-term price direction is determined by other factors…

Our central view is that it’s the latter, i.e. real yields, Fed rate expectations, and the dollar are likely to ‘top out’ and move lower in the near term (over the next few months). If that’s correct, then recent headwinds for the gold price should become tailwinds, with gold likely to break above its key resistance level [US$2,077 an ounce].

So perhaps it’s not a good idea to write gold, and gold miners, off just yet. But let’s wait and see how the precious metal fares over the rest of 2022.

Motley Fool contributor Sebastian Bowen has positions in Newcrest Mining 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 no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Gold

gold, gold miner, gold discovery, gold nugget, gold price,

Here’s how the Newcrest Mining share price glamoured in FY22

It was a choppy one that's for sure.

Read more »

a group of business people sit dejectedly around a table, each expressing desolation, sadness and disappointment by holding their head in their hands, casting their gazes down and looking very glum.

Losing their shine: 3 ASX 200 gold shares hitting new 52-week lows today

A falling gold price appears to have weighed on these ASX 200 shares.

Read more »

A woman with a sad face looks to be receiving bad news on her phone as she holds it in her hands and looks down at it.

Why are ASX 200 gold shares falling today?

The price of gold has descended to its lowest level in six months.

Read more »

a woman wearing a sparkly strapless dress leans on a neat stack of six gold bars as she smiles and looks to the side as though she is very happy and protective of her stash. She also has gold fingernails and gold glitter pieces affixed to her cheeks.

Here’s why the St Barbara share price shone 8% brighter today

What's going on with the gold miner on Tuesday?

Read more »


Regis Resources share price jumps 9% on record quarter

This gold share is glittering on Tuesday...

Read more »

A woman holds a gold bar in one hand and puts her other hand to her forehead with an apprehensive and concerned expression on her face after watching the Ramelius share price fall today

Why did the Northern Star share price tumble 24% in June?

We take a closer look at what drove down Northern Star shares last month.

Read more »

a man clasps his hand to his forehead as he looks down at his phone and grimaces with a pained expression on his face as he watches the Pilbara Minerals share price continue to fall

Why did the Regis Resources share price sink 35% in June?

This gold share was sold off last month...

Read more »

A woman wearing a gold top and carrying a gold bar gives the thumbs down signal as she leans against a wall with a sombre look on her face as the Kingsgate share price goes lower
Share Fallers

Why did the Evolution share price freefall 38% in June?

It's been another disappointing month for Evolution shares.

Read more »