This gold mining stock’s diverse operations give it an edge

Last week, Newmont Mining (symbol NEM on New York), one of the world’s biggest gold producers, said that it believes that gold could rise as high as $1,350 U.S. an ounce this year. Gold has fallen from the all-time high of $1,214.80 U.S. that it reached in late 2009, and now trades around $1,092 U.S.

We cover Newmont in our Wall Street Stock Forecaster and Canadian Wealth Advisor newsletters. See below for more on this gold mining stock’s wide-ranging operations.

Gold investing can expose you to unique risks

We agree that gold could well move higher over the longer term, although it will remain very volatile. Rising gold would be mainly driven by investor fears that low interest rates and government stimulus spending will spur inflation. That could prompt many investors to seek security by investing in gold.

As with any volatile commodity investment, conservative investors should be careful when investing in gold. Further, you should hold only a modest part of the resources segment of your portfolio in gold stocks.

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Gold-mining stocks: A better choice than bullion

We think the best way to invest in gold is through gold-mining stocks. We recommend staying away from buying gold bullion, coins (unless you collect them as a hobby) or certificates representing an interest in bullion.

Like bullion, gold mining stocks benefit from increases in the price of gold. But unlike bullion, which comes with a continuing cash drain for management, insurance and so on, gold stocks have the potential to generate income.

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Newmont Mining: A diversified gold producer that’s building for the future

Newmont made its prediction of gold at $1,350 U.S. an ounce at the official opening of its Boddington gold mine, which is now the largest gold mine in Australia. The company expects Boddington to produce one million ounces of gold and 30,000 tonnes of copper in each of its first five years. The mine’s average annual output over its expected life of over 20 years is 850,000 ounces of gold and 35,000 tonnes of copper.

Newmont continues to build a strong portfolio of new properties to replace its current reserves. Aside from Boddington, the company is deciding whether to move forward with its Minas Conga copper/gold project in Peru. Newmont believes that Minas Conga could contain more than 6 million ounces of gold and about 1.7 billion pounds of copper. The company expects that a mine on the site would last between 15 and 20 years.

Whether or not Newmont’s gold-price prediction comes true, the company remains a standout among gold stocks. That’s because its high-quality mines should last for decades, and its costs are coming down. As well, most of its production is in politically stable areas, such as North America and Australia.

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