When it comes to buying ASX 200 gold shares, Newcrest Mining Ltd (ASX: NCM) and Northern Star Resources Ltd (ASX: NST) are two of the most prominent choices facing ASX investors wanting to invest in gold.
Newcrest and Northern Star are the largest and second-largest ASX gold miners on the share market by market capitalisation respectively. So what better pair to compare for a better buy right now?
Let's get started.
It's important to note when comparing these two ASX gold shares that the Newcrest share price has been markedly elevated in recent weeks thanks to a takeover bid from the US gold miner Newmont Corporation. Newmont has offered an all-scrip deal to acquire Newcrest, which the company's board and shareholders are still considering. This bid values Newcrest at approximately $29.4 billion, or $32.87 per share.
For context, Newcrest shares started 2023 at $20.84 a share and are now up almost 40% year to date. This is obviously impacting Newcrest's valuation today, but we'll plough through with a comparison with Northern Star regardless.
Here's a table that compares some of these two gold shares' major metrics so we can make a fair comparison between the two:
| Newcrest Mining | Northern Star Resources | |
| Share price (at the time of writing) | $28.98 | $13.88 |
| Market capitalisation | $25.88 billion | $15.97 billion |
| Price-to-earnings (P/E) ratio | 19.71 | 74.77 |
| Dividend yield (at the time of writing) | 1.78% | 1.62% |
| Gold reserves (FY22) | 120,000,000 ounces (measured and indicated) | 20,683,000 ounces (proved and probable) |
| Gold production (FY22) | 1,956,000 ounces | 1,530,000 ounces |
| Major mine locations | Australia, Canada, PNG | Australia, USA (Alaska) |
| Underlying profit (FY22) | $872 million | $273 million |
| AISC per ounce mined | $732 | $1,555 |
So, after comparing these two companies, my own clear favourite is Newcrest.
Why Newcrest is my pick for the best ASX gold share
Like any mining company, a gold miner is only as strong as its underlying costs. Newcrest's impressive All In Sustaining Cost (AISC) per ounce of $732 gives the company far more wriggle room if gold prices descend from their current historical highs than Northern Star's $1,555.
Say gold descends to $1,400 per ounce over the next year. That pricing would render Northern Star unprofitable, but Newcrest would still be making money. That gives me far more confidence in Newcrest as a gold investor.
Further, Newcrest has far more gold reserves left in its mines than Northern Star does. That adds to my conviction that Newcrest is the better option today.
So regardless of whether the Newmont bid goes through with Newcrest, it's the miner that I would have more confidence in investing in today, comparing all of the above metrics. You'll even get slightly higher dividend income from Newcrest at the current share price.
