Is Newmont’s Correlation with Gold Falling?
Mining correlations with precious metals
Precious metals and mining funds and stocks have been falling since mid-April, as investors have turned away from these safe-haven investments and opted for riskier assets.
But it’s crucial for investors to understand which stocks are closely tied to precious metals and which aren’t. Stocks that are highly correlated to precious metals could be more significantly affected by global indicators that influence precious metals.
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Specifically, the Global X Silver Miners Fund (SIL) and the iShares MSCI Global Gold Mining ETF (RING) have both seen significant correlations with their respective precious metals. These two funds closely track the performances of their respective precious metals and have reduced their YTD (year-to-date) gains to 5.1% and 5.4%, respectively.
Notably, over the past three years, Newmont has seen upward correlations with gold, while B2Gold and Royal Gold have seen downward correlations. Newmont’s correlation with gold has risen from a three-year correlation of ~0.92 to a YTD correlation of ~0.71.
This correlation of ~0.71 means that ~71% of the time, Newmont has moved in the same direction as gold since the beginning of 2017.