Newmont Mining Geared Up for Continuing Bullish Trend in Gold Market

In the recent months, experts have been predicting that gold prices will continue to rise this year and the next. The bullish trend in the gold market is showing no sign of abating any time soon and it appears that the predictions will indeed come true. The Newmont Mining Corporation, the largest gold producer in the U.S. clearly believes so if the changes brought to its dividend policy are any indication.

Gold Price Expectations

According to Richard O’Brien, CEO of Newmont, the price of the precious metal may go up to $2000 by 2011 end. As investors continue to buy into gold to move away from dollar, the price is likely to rise further to $2300 by the end of the following year, he says. The mining company is counting on a steady increase in prices that will last for a good 5 to 7 year period.

The precious metal is now entering its 11^th year of a bullish trend, the longest period that such a trend has been sustained in history. A record high in the beginning of this month showed that investor interest continues to strengthen. So far, in this year, gold price has increased by 25% which is quite a significant jump.

The Reasons for the Expected Price Rise

O’Brien explains that the bullish trend will be encouraged and supported by the shift of investor interest into precious metals owing to the ongoing financial volatility in U.S. and global markets. Stability will not come in instantly and no matter how effective future fiscal policies may be, it is going to be virtually impossible to convince investors to stay out of precious metals at least in near future. The fact that in spite of the dipping dollar value, not much is being done at policy level is surely eroding public confidence in governmental intervention. Given this, they are bound to look for and place their trust in safe haven investments like gold.

New Dividend Policy at Newmont

In tune with advancing gold prices, Newmont stock value has also gone up by nearly 8% this year. In April, the mining company made an official announcement about linking dividends to gold prices. This policy has now been revamped so that if gold prices touch the $1700 mark, quarterly dividends will jump by 7.5 cents per share. Stockholders will enjoy a 10 cent jump in dividend if gold price crosses the $2000 mark, company sources state. The fact that the company’s stock price has jumped following the announcement shows that the market is viewing these changes positively.