How Miners’ Correlations with Precious Metals Are Trending in April



Mining correlations with precious metals

As global tumult grips markets again and as investors turn to mining stocks as safe havens, it’s crucial to understand which stocks are closely tied to precious metals. For example, stocks with higher correlations to precious metals will likely be impacted more by global indicators that influence precious metals.

Specifically, turbulence in markets due to the recent US attack on Syria, the upcoming French elections, and Brexit have caused precious metals to rise. As a result, mining stocks have also gotten a boost.

Funds such as the VanEck Vectors Gold Miners (GDX) and the iShares MSCI Global Gold Min (RING) have seen significant correlations with their respective precious metals.

Among New Gold (NGD), Newmont Mining (NEM), Sibanye Gold (SBGL), and Gold Fields (GFI), Sibnaye has the lowest correlation with gold, while Gold Fields has the highest correlation with gold. Over the past three years, all four miners have seen upward correlations with gold.

Remember, studying the upward and downward trends is important for metal investors, as price change predictability can be affected by rises and falls in precious metal prices.

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Upward trending correlation

Notably, Gold Fields’ correlation with gold has increased from a three-year correlation of ~0.77 to a one-year correlation of ~0.80. A correlation of ~0.80 means that ~80.0% of the time, Gold Fields has moved in the same direction as gold over the past year.


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