Reading the Upward-Downward Correlation to Gold in April



Miners 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 would be impacted more by global indicators that influence precious metals.

Specifically, turbulence in markets due to tensions between US and North Korea, the US and Russia over Syria, the upcoming French elections, and Brexit have caused precious metals to rise. As a result, mining stocks have also received a boost.

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

Among Sibanye Gold (SBGL), Gold Fields (GFI), Coeur Mining (CDE), and Barrick Gold (ABX), Barrick Gold 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’s 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 about 80% of the time, Gold Fields has moved in the same direction as gold over the past year.


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