Newmont Mining 4Q Profit Easily Beats Estimates

Newmont Mining, a component of the Amex Gold BUGS Index (the HUI), reported its earnings for the fourth quarter of 2009. The EPS figure was $1.13, $1.14 excluding various items. According to the Reuters report on it, analysts were expecting 79 cents. The company cautioned that it was expecting costs to rise this year.

This makes for the third HUI component to present stronger-than-expected earnings for the last quarter. So far, the HUI doesn't seem to "get it."


Speaking of the HUI, Przemyslaw Radomski over at Minyanville has put togeether a correlation matrix which shows the HUI having a closer correlation with the general stock market than with gold itself in the last 10 trading days. He also shows an unexpected positive (if weak) correlation with the U.S. dollar in that same timeframe. Additionally, his matrix shows that the correlation between gold itself and the S&P 500 is also strong. Since he's bearish on the stock market, he counsels holding back from buying additional gold unless the correlation breaks down. At the end, he does recommend buying some if none is already owned.

At any rate, his work shows that lumping gold in with the risk-appetite trade has been justified.