In What Direction Are Precious Metals and Their Miners Moving?

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Part 3
In What Direction Are Precious Metals and Their Miners Moving? PART 3 OF 4

In What Direction Are Miners’ Correlations Moving in July?

Mining stocks

In this article, we’ll concentrate on the correlation trends of a few selected miners with gold over the past three years. We’ll examine the correlations of Sibanye Gold (SBGL), Agnico Eagle Mines (AEM), Primero Mining (PPP), and Silver Wheaton (SLW).

In What Direction Are Miners&#8217; Correlations Moving in July?

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Funds such as the iShares MSCI Gold Mining ETF (RING) and the Global X Silver Miners ETF (SIL) are correlated with gold. These two funds have risen 2.2% and 3%, respectively, on a trailing-five-day basis.

Trends in correlation

Among the miners under our analysis, Silver Wheaton has the highest correlation with gold, and Sibanye Gold has the lowest correlation. Sibnaye Gold has seen a falling correlation trend with gold, while Primero Mining and Silver Wheaton have seen rising correlation trends with gold. Agnico Eagle has seen a mixed correlation trend with the precious metal.

A high correlation is an indicator that a price change in gold could cause a mining company to trade in the same direction. A low correlation suggests that it’s less likely a miner will move in tandem with gold.

Silver Wheaton has seen its correlation with gold fall to a three-year correlation of ~0.70 and a year-to-date correlation of ~0.80. A correlation of ~0.80 suggests that the company has moved in the same direction as gold ~80% of the time over the past year.

It’s crucial to look at mining shares and understand their correlations with gold silver before making investment decisions.


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