Newmont's 2026 Guidance Exposes Near-Term Squeeze Amid Crowded Gold Beta Trade

What happened

The gold rally, fueled by macroeconomic uncertainty, has bolstered Newmont's status as a safe-haven play, but its FY2026 guidance reveals lower production, higher costs, and increased capex that pressure near-term free cash flow. Specifically, guidance targets attributable gold production of 5.260 Moz with AISC of $1,680/oz, but this embeds a $4,500/oz gold assumption and price-linked royalties that skim margin upside. Management is prioritizing buybacks over dividend growth, leading to a low forward yield, while capital return commitments remain discretionary and non-binding per SEC filings. DeepValue analysis highlights that elevated sustaining capex, reclamation spend, and joint-venture volatility further constrain per-share value creation despite record bullion prices. Investors now face a crowded narrative where gold strength masks operational softness, with execution risks and fiscal overhangs like Ghana's sliding royalty proposal looming.

Implication

Near-term, Newmont's stock is vulnerable to underperformance if gold momentum stalls or if the company fails to meet its H2-weighted production and cost targets, given guidance's sensitivity to sequencing and partner execution. The high sustaining capex and reclamation obligations, totaling over $2.8 billion in 2026, will drain free cash flow, limiting reliable shareholder returns despite management's buyback focus. Price-linked royalties and taxes mean gold price increases do not translate linearly to earnings, reducing the stock's effective leverage and exposing it to margin compression in a high-price environment. Critical watch items include quarterly production adherence to the 48/52 H1/H2 split, updates on Ghana's fiscal policies, and any signs of cost creep from tailings or water treatment spend. Overall, maintaining a wait-and-see stance allows for better risk-reward as the market's crowded gold narrative confronts these operational realities over the next 6-12 months.

Thesis delta

The new article confirms and amplifies the DeepValue thesis that Newmont is overvalued as a simple gold proxy, highlighting how 2026 guidance's lower production and higher costs align with filings showing margin dilution from royalties and taxes. It reinforces the need for patience to verify operational delivery against guidance and monitor external risks like Ghana's sliding royalty, rather than buying into the bullish gold sentiment. No material shift in the investment call is warranted, but the urgency for confirmation has increased given the near-term pressure on metrics.