Barrick and Newmont are the largest publicly traded gold miners in the world. Between the two of them, they’ll mine ~10 million ounces this year. Considering only about 120 million ounces are mined every year, that’s a pretty big chunk for just two companies…
For that reason, these companies command attention in the gold market.
And frequently, a bull market in gold is the worst time to be the CEO of a gold major. For instance, both Barrick and Newmont announced the termination of their current CEOs this week.
When gold is in a slump, it’s easy to excuse subpar results or slower than expected revenue growth.
But when gold is soaring? People have questions about your performance, and their expectations balloon along with gold’s price.
Over the past 18 months, gold is up almost 100%. Newmont is up too… about 100%.
It’s the same story with Barrick… and it’s the same problem for these gold majors that I’ve been pointing out for years: they have a hard time keeping pace with gold over any significant time frame.
Investors who buy these gold majors expect more than just barely riding gold’s coattails. To be charitable, it’s very rational to expect a company that only produces one commodity to outperform movements in the price of the commodity.
But what people rationally expect and what they get in reality are frequently two very different things.
Gold majors have a hard time outperforming gold for a couple of reasons. The big one: the same dynamics that cause gold to rise in price also directly impact the costs of producing gold. Inflation concerns and dollar weakness tend to move the price of gold as well as labor, energy, equipment and other costs.
It doesn’t help a gold company’s bottom line to see gold rise in price if everything else they pay for also rises in price. Over time, a gold major’s all in sustaining costs (the total amount it costs to mine an ounce of gold) move proportional to increases in gold’s price.
For instance, in 2015 Newmont reported all in costs per ounce of $898. In 2024, that number had jumped to $1,620 an ounce.
That’s an 80% increase in costs – a number that is certainly higher in 2025.
But investors don’t really understand this problem.
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And company board members may not have a strong grasp on the issue either, but they at least understand investor expectations. Firing the CEO is an easy way to signal to shareholders that you’re doing something.
These board members also tend to be very conservative. They’re way more likely to pursue safe, break-even gold projects than to take a chance on a slightly riskier venture that might have better economics.
The people on the boards of gold majors like Newmont and Barrick earn very comfortable livings. They’re not interested or motivated in making outsized gains by going further out on the risk curve. So they tend to get behind the most de-risked, boring and ordinary gold projects that keep the ball moving.
CEOs tend to be a little more focused on results – especially at these large gold miners – because they know the only real way to move the share price is to improve free cash flow.
It could be that the CEOs were motivated to push for riskier projects with the chance to move the free cash flow needle. At this stage in the gold bull market, board members don’t want to rock the boat with risky ventures. They all remember the last gold bull market, when firms bought up terrible projects at worse prices right before the market crashed…
And it’s hard to overestimate how much uncertainty there is out there – even among ostensibly savvy people who work at gold majors like Newmont and Barrick.
At this stage in the gold bull, even the largest gold miners in the world are seeking safety and surety. That’s not behavior you see during the top. It’s what you see when people are still pinching themselves in disbelief that the bull market is real.
Best,
Garrett Goggin, CFA, CMT
Chief Analyst & Founder, Golden Portfolio