Analyzing Major Miners’ Correlation Trends with Gold
Precious metals stocks
As we discuss the impact of global variables on precious metals and mining stocks, it’s crucial for us to understand how changes in gold’s price can affect the companies that mine it.
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Other than these four stocks, funds such as the VanEck Vectors Junior Gold Miners ETF (GDXJ) and the SPDR Metals and Mining ETF (XME) also have reasonable relationships with gold. These two funds have seen rises of 7.4% and 0.93%, respectively, on a trailing-30-day basis.
Among Royal Gold, Goldcorp, New Gold, and Newmont, New Gold has the highest correlation with gold, while Goldcorp has the lowest correlation. Over the past three years, all four of the above-mentioned miners except for Royal Gold have seen rising correlations with gold.
Remember, a rise in correlation suggests there’s a bigger chance that a rise in gold’s price will lead to a rise in mining stocks. Goldcorp has a three-year correlation of ~0.51 and a year-to-date correlation of ~0.61 with gold. Its correlation of ~0.61 means that Goldcorp has moved in the same direction as gold ~61% of the time.
It’s important for investors to remember that these correlations can move in different directions at different times.