In What Direction Are Miners’ Correlations Moving in July?
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).
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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.