S&P GSCI versus gold
The safe-haven appeal of the precious metals has been significantly affected by the rise of the equity markets and crude oil prices. The gains in gold and silver following the Federal Reserve meeting on Wednesday, March 16, were marginal. Though gold has been the best-performing asset so far in 2016, it ended up in 15th place among the 24 commodities listed on the S&P GSCI (Goldman Sachs Commodity Index) on Thursday, March 17.
The S&P GSCI has risen about 4.6% over the past two trading days. The rise in the index was most likely due to the recovery of most commodities as the Fed delayed the rate hike. The equity sector reacted positively.
Gold and silver have risen about 19.3% and 16.4%, respectively, since the beginning of the new year. The performance of the index, which includes wheat, oil, copper, silver, and gold, has been much lower than that of the precious metals over the past few months.
Among the mining-based ETFs, the VanEck Vectors Gold Miners ETF (GDX) and the Sprott Gold Miners ETF (SGDM) have also risen 48.9% and 50.8%, respectively, on a YTD (year-to-date) basis. The safe-haven demand for precious metals has buoyed these mining-based investments.
The mining companies that have surged include Goldcorp (GG), Royal Gold (RGLD), and Agnico Eagle Mines (AEM). These three companies have risen 45.8%, 39.7%, and 44.7% respectively, on a YTD basis. Together, these three companies make up 16.9% of GDX.
The fall of the US dollar and the rise of the equities have played have a significant role in providing support to gold prices and to mining stocks.