Newmont-Goldcorp deal may finally bring legitimacy back to gold sector — but expect volatility along the way

Newmont Mining Corp. and Goldcorp Inc. of Vancouver have agreed to combine their gold companies in a deal worth about US$10 billion.Postmedia

A US$10 billion mega-deal to merge two of the world’s premier gold companies may bring legitimacy and, with it, investors back to the largely depressed sector in Canada, experts say.

On Monday, Colorado-based Newmont Mining Corp. announced the US$10 billion acquisition of Canada’s Goldcorp Inc in a transaction that will see the creation of the world’s largest gold miner. Together, the companies produce 7.9 million ounces of gold per year.

The performance of Canada’s gold stocks largely hinges on the price of the precious metal itself, which has been volatile in the last year. Despite recovering more than USD$150/oz since its 52-week low of USD$1,161 in August, gold is still more than $100/oz off its 52-week high. The precious metal hit USD$1,291/oz as of 4 p.m. EST, up about US$2.