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The Silver Market: Fundamentals, Spreads, and More

PART:
1 2 3 4 5 6
Part 5
The Silver Market: Fundamentals, Spreads, and More PART 5 OF 6

A Look at Miners’ Correlation with Precious Metals in May 2017

Miners and precious metals

Precious metals have fallen sharply as the upcoming Fed meeting could result in another interest rate hike. Rising interest rates impact precious metals as well as mining companies. It’s widely expected that precious metal mining stocks will follow the direction of their respective precious metals. Therefore, it is crucial to understand which stocks are closely tied to precious metals. 

A Look at Miners&#8217; Correlation with Precious Metals in May 2017

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Mining shares that saw a revival in their prices over the last week include the SPDR S&P Metals and Mining ETF (XME) and the iShares iShares MSCI Global Gold Miners ETF (RING). They have risen 2.9% and 6.1%, respectively, over the past five trading days.

Correlation trends

Among Alamos Gold (AGI), First Majestic Silver (AG), B2Gold (BTG), and Royal Gold (RGLD), B2Gold has the lowest correlation with gold, while First Majestic has the highest. Over the past three years, B2Gold and Alamos Gold have seen a rising correlation with gold, while the other two’s correlation with gold has been mixed. Metal investors should study upward and downward trends because price change predictability can be affected by precious metal prices.

B2Gold’s has a three-year correlation with gold of ~0.54, and a one-year correlation of ~0.57. A correlation of ~0.57 means that ~57% of the time, B2Gold has moved in the same direction as gold.

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