The market has been hating on this ASX 200 share in 2022. Here’s why I still love it

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One of my worst performers in my ASX share portfolio this year has been Newcrest Mining Ltd (ASX: NCM). Newcrest, the largest ASX 200 gold miner on the share market, has had a shocker in recent years.

Not only have Newcrest shares suffered a 31.8% fall year to date in 2022, but the company has also lost almost 50% of its value over the past two years. Newcrest has also just hit a new 52-week low of $16.51 a share in the past month or so. That’s the lowest share price Newcrest has commanded since 2016.

So why on earth am I still happy to hold this loser in my portfolio?

Why I still own Newcrest Mining shares

Well, I confess part of my thesis is an insurance policy. Gold, the precious metal that Newcrest mines, is traditionally viewed as a hedge against economic calamities. If there is another financial crisis on the horizon, gold, in my view, is likely to do well. And if gold does well, so will the companies that own vast stores of it.

I would rather my Newcrest position underperform and my other ASX shares prosper. But owning Newcrest does lend me some ‘sleep well at night’ value.

But I also see considerable value in the Newcrest share price itself. In its FY2022 annual report, Newcrest estimated that its gold reserves stood at 3.5 million ounces of proven reserves, with another 58 million ounces of probable reserves.

The proven reserves alone would be worth a total of US$5.86 billion ($8.84 billion) at today’s price of US$1,673 per ounce. The probable reserves would add another US$97.03 billion ($146.33 billion) if fully realized.

Now, Newcrest’s entire market capitalization stands at $14.99 billion today, going off of Friday’s closing share price. Buying a gold reserve potentially worth north of $100 billion for just $14.99 billion seems like a good deal to me.

So that’s why I continue to hold my Newcrest shares. It may not be one of my best performers. But I never expected it to be. It is currently filling the role in my portfolio that I always hoped it would.

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