These Mining Stocks Have Downward Trending Correlations with Gold

Uncertainty in the market significantly affects the performances of precious metals. It also affects precious metals mining stocks, which are known to closely track precious metals.

Meera Shawn - Author
By

Mar. 14 2017, Published 3:57 p.m. ET

uploads///CORRELATION

Mining stocks and gold

Uncertainty in the market significantly affects the performances of precious metals. It also affects precious metals mining stocks, which are known to closely track precious metals.

Precious metals stocks (SGOL) (SIVR) are often more carefully synced to the metals they mine than to the overall equity market (SPY). It’s important to know which mining stocks have overperformed and which have underperformed precious metals.

The buoyancy of precious metals could be challenged even further by future interest rate hikes, which could cause mining stocks to fall. 

Mining companies that have high correlations with gold include Alamos Gold (AGI), First Majestic Silver (AG), B2Gold (BTG), and Royal Gold (RGLD). Although mining companies often amplify the returns of precious metals, they’ve shown mixed performances in the past week.

Article continues below advertisement
Article continues below advertisement

Upward and downward trends

While all the stocks listed above are closely related to precious metals, Royal Gold has the highest correlation with gold year-to-date. First Majestic has the lowest correlation with gold.

Over the past three years, B2Gold, First Majestic, and Royal Gold have seen downward-trending correlations with gold. Alamos Gold has seen both upward and downward trends.

B2Gold’s correlation has fallen from a ~0.72 three-year correlation to a ~0.66 year-to-date correlation. A correlation of ~0.66 means that ~66% of the time, B2Gold has moved in the same direction as gold in the last year. Usually, a fall in gold leads to falls in mining stocks, and vice versa.

Advertisement

Latest First Majestic Silver Corporation News and Updates

    Opt-out of personalized ads

    © Copyright 2024 Market Realist. Market Realist is a registered trademark. All Rights Reserved. People may receive compensation for some links to products and services on this website. Offers may be subject to change without notice.