Newmont Mining (NYSE: NEM) nearly tripled its profits as the gold-mining company cited increased demand in India and China for gold, as well as increased demand in Asia for its copper. Gold supplies have been tightening globally to go along with this increasing appetite for gold.

IN PICTURES: How To Make Your First $1 Million

A Golden Quarter
Newmont's revenues went from $1.54 billion in the first quarter of 2009 to $2.24 billion in the first quarter of this year. Net income was $546 million, up from $189 million last year. Earnings per share was $1.11 compared with 40 cents last year. Excluding one-time gains, EPS was 83 cents.

Newmont produced 1.3 million ounces of gold, compared to 1.27 million ounces in the year ago quarter. It sold gold at an average of $1,106 an ounce, up from $906 an ounce last year. Costs to produce each ounce increased from $443 to $480. Newmont also produced 90 million pounds of copper, compared to 43 million a year ago. It mostly sells its copper to Japan.

Gold to Rise?
Gold ETF SPDR Gold
(NYSE: GLD), the popular physically-backed ETF that allows a trader or investor to own gold without physically taking possession of it, recently added six tons of gold to its inventory to bring it to a record 1,146.22 tons. The ETF trades at $114 a share. The precious metal itself has traded as high as $1,175 per ounce, perhaps on the questions about the Greek debt along with the background of rising interest rate fears.

Goldcorp (NYSE: GG), another major mining stock like Newmont, features ongoing strong earnings and is currently one of the lowest cost producers at $422 per ounce. Kinross Gold Corp. (NYSE: KGC) recently purchased Underworld Resources. The strategy of growing by acquisition is a favorite in the gold mining industry.

While many of the gold stocks have been seeing a healthy uptrend in their share prices, not all have participated. Newmont is trading close to its 52-week high, where Eldorado Gold (NYSE: EGO) and Gammon Gold (NYSE: GRS) have been lagging. Eldorado is more likely undervalued, while Gammon has had problems with its underlying mining business, so the stock hasn't been performing well.With global fundamentals for gold improving, though, investors might want to be on the lookout for turnaround plays.

Investing in Newmont
Newmont and some of the other gold stocks are heating up, so this always makes buying the stocks at bargain prices much tougher. Newmont's terrific earnings are only a part of its story. Its solid fundamentals include low debt, and as we mentioned, its low cost of production. But as good a company as Newmont is, fundamental investors still shouldn't buy at a high price.

Bottom Line
There are also many arguments against gold as an investment, and gold mining stocks are a further leveraged way of investing in the metal, so investors need do things in conjunction only with their tolerance for risk. Gold historically can be volatile, but its enduring history has proved it highly lucrative. Newmont on a price dip or some of the other major miners offer tremendous long-term potential. (To learn more, see 8 Reasons To Own Gold.)

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

Related Articles
  1. Economics

    India: Why it Might Pay to Be Bullish Right Now

    Many investors are bullish on India for all the right reasons. Does it present an investing opportunity?
  2. Stock Analysis

    Analyzing Altria's Return on Equity (ROE) (MO)

    Learn about Altria Group's return on equity (ROE) and analyze net profit margin, asset turnover and financial leverage to determine what is causing its high ROE.
  3. Investing Basics

    Building My Portfolio with BlackRock ETFs and Mutual Funds (ITOT, IXUS)

    Find out how to construct the ideal investment portfolio utilizing BlackRock's tools, resources and its popular low-cost exchange-traded funds (ETFs).
  4. Fundamental Analysis

    Performance Review: Commodities in 2015

    Learn how commodities took a big hit in 2015 with a huge variance in performances. Discover how the major commodities performed over the year.
  5. Investing News

    Icahn's Bet on Cheniere Energy: Should You Follow?

    Investing legend Carl Icahn continues to lose money on Cheniere Energy, but he's increasing his stake. Should you follow his lead?
  6. Stock Analysis

    Analyzing Google's Return on Equity (ROE) (GOOGL)

    Learn about Alphabet's return on equity. How has its ROE changed over time, how does it compare to its peers and what factors are driving ROE for the company?
  7. Investing News

    Is Buffett's Bet on Oil Right for You? (XOM, PSX)

    Oil stocks are getting trounced, but Warren Buffett still likes one of them. Should you follow the leader?
  8. Investing

    3 Things About International Investing and Currency

    As world monetary policy continues to diverge rocking bottom on interest rates while the Fed raises them, expect currencies to continue their bumpy ride.
  9. Stock Analysis

    The Biggest Risks of Investing in SandRidge Stock

    Learn about the significant risks of investing in SandRidge. Read how the company may not be able to service its substantial debt load.
  10. Investing News

    Chipotle Served with Criminal Probe

    Chipotle's beat muted expectations and got a clear bill from the CDC, but it now appears that an investigation into its E.coli breakout has expanded.
RELATED FAQS
  1. Which mutual funds made money in 2008?

    Out of the 2,800 mutual funds that Morningstar, Inc., the leading provider of independent investment research in North America, ... Read Full Answer >>
  2. Should mutual funds be subject to more regulation?

    Mutual funds, when compared to other types of pooled investments such as hedge funds, have very strict regulations. In fact, ... Read Full Answer >>
  3. Do ETFs pay capital gains?

    Exchange-traded funds (ETFs) can generate capital gains that are transferred to shareholders, typically once a year, triggering ... Read Full Answer >>
  4. How do real estate hedge funds work?

    A hedge fund is a type of investment vehicle and business structure that aggregates capital from multiple investors and invests ... Read Full Answer >>
  5. Are Vanguard ETFs commission-free?

    While some Vanguard exchange-traded funds (ETFs) are available commission-free from third-party brokers, a large portion ... Read Full Answer >>
  6. Do Vanguard ETFs require a minimum investment?

    Vanguard completely waives any U.S. dollar minimum amounts to buy its exchange-traded funds (ETFs), and the minimum ETF investment ... Read Full Answer >>
COMPANIES IN THIS ARTICLE
Trading Center