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Inside the Key Correlation Trends in Mining as of April 13

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Mining correlations with precious metals

As global tumult grips markets once 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, North Korea concerns, and Brexit have all caused precious metals to rise. As a result, mining stocks have gotten a boost.

Funds such as the Sprott Gold Miners (SGDM) and the Global X Silver Miners (SIL) have seen significant correlations with their respective precious metals.

Among Alamos Gold (AGI), First Majestic (AG), B2Gold (BTG), and Royal Gold (RGLD), Alamos has the lowest correlation with gold, while Royal has the highest correlation with gold. Over the past three years, all four miners have seen downward correlations with gold.

Remember, studying 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 correlations

Notably, First Majestic’s correlation with gold has increased from a three-year correlation of ~0.71 to a one-year correlation of ~0.65. A correlation of ~0.65 means that ~65.0% of the time, First Majestic has moved in the same direction as gold over the past year.

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