Selling Strategy for ASX 200 Shares: Timing a Tripled Value Exit

Rowan Ashford

ago 2 hours

Investors looking at the Australian market, particularly the ASX 200, may find opportunities in the gold sector. One of the standout performers in this index is Newmont Corporation (ASX: NEM), the largest gold miner listed on the ASX. Recently, Newmont shares have experienced remarkable growth, tripling in value over the past two and a half years.

Selling Strategy for ASX 200 Shares: Timing a Tripled Value Exit

An investor acquired Newmont shares in November 2023 as part of an acquisition that involved Newcrest Mining, an Australian gold producer. This move not only marked the debut of Newmont’s secondary listing but also reflected strategic foresight amidst volatile economic conditions.

Market Trends Impacting Newmont’s Success

The rise in gold prices has been significant, influenced by several economic factors:

Erratic economic policies
Geopolitical tensions
Inflationary pressures
Increased government debt
Central bank purchases for diversification

In early 2023, the price of gold hovered under US$2,000 per ounce. As of now, it has soared to over US$4,700 per ounce, driving up the value of Newmont shares significantly. Initially priced at $60, these shares are now valued at approximately $179.50.

The Profit Margin Advantage

Newmont’s financials illustrate a notable advantage in terms of profit margins. The cost to extract gold for Newmont is approximately US$1,500 per ounce. This means that as the gold price increases, profits can rise exponentially, enhancing the returns for shareholders.

For instance, if gold prices elevate from US$2,000 to US$3,000, that’s a 50% increase, yet Newmont’s profit margins surge by 200%. Such calculations underpin the remarkable tripling of investment value since 2023.

Considerations for Future Decisions

While many investors maintain a strategy of holding successful shares, the approach towards Newmont is slightly different. The initial investment was not aimed purely at long-term growth but acted as an insurance measure against market volatility.

As geopolitical and economic conditions remain uncertain, decisions regarding when to sell may not focus on trying to predict market peaks. Instead, holding Newmont shares could be viewed as a hedge against an unpredictable macroeconomic landscape, maintaining a careful balance between risk and reward.

For those exploring the ASX 200, Newmont Corporation symbolizes both the potential rewards of gold investments and the strategic considerations essential for timing exits effectively.