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How Precious Metals Performed after July 7 Carnage

PART:
1 2 3 4
Part 4
How Precious Metals Performed after July 7 Carnage PART 4 OF 4

Which Miners Have a Downward Trending Correlation to Gold?

Mining stocks

A correlation analysis gives us an idea about mining stocks’ price movements and how closely they follow changes in precious metals. It’s important to look at recent correlation trends when making investment decisions.

Which Miners Have a Downward Trending Correlation to Gold?

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In this part of the series, we’ll examine First Majestic Silver (AG), B2Gold (BTG), Royal Gold (RGLD), Goldcorp (GG), and their correlations with gold.

Funds such as the iShares MSCI Gold Min (RING) and the VanEck Vectors Gold Miners (GDX) are correlated with gold. These two funds saw their prices fall 2.6% and 1.4%, respectively, on Monday.

Correlation trends

Among these miners, Royal Gold has the highest correlation with gold, while Goldcorp has the lowest correlation. The above four miners except Goldcorp have seen a downward trending correlation to gold.

A rise in correlation indicates that a price change in gold would likely cause mining shares to trade in the same direction. A fall in correlation suggests that it’s less likely that mining stocks will move with gold.

Goldcorp has seen its correlation with gold move to a three-year correlation of ~0.51 and a year-to-date correlation of ~0.61. A correlation of ~0.61 means that the company has moved in the same direction as gold ~61% of the time over the past year.

It’s important to remember that correlations can move in different directions at different times.

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