Analyzing the Correlation Trends of Miners in May 2017


Nov. 20 2020, Updated 3:49 p.m. ET

Miners and precious metals

The upcoming interest rate hike fear took over precious metals, which fell at the start of May. However, they’ve been recovering lately as the Trump trade fear has resurfaced. Mining companies have also seen a considerable rise in price over the past few trading days.

It’s widely expected that precious metal mining stocks will follow the direction of their respective precious metals. So it’s crucial to understand which stocks are closely tied to precious metals.

Mining funds that saw a revival in prices over the last week include the Sprott Gold Miners ETF (SGDM) and the Global X Silver Miners ETF (SIL). They have risen 7.0% and 9.3%, respectively, over the past five trading days.

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Correlation trends

Among Randgold Resources (GOLD), Yamana Gold (AUY), AngloGold Ashanti (AU), and Hecla Mining (HL), Randgold has the lowest correlation with gold, while Yamana has the highest. Over the past three years, Yamana has seen a rising correlation with gold, while AngloGold has seen a falling correlation to gold. Metal investors should study upward and downward trends because price change predictability can be affected by precious metal prices.

AngloGold has a three-year correlation with gold at ~0.66 and a one-year correlation of ~0.63. A correlation of ~0.63 means that ~63.0% of the time, AngloGold has moved in the same direction as gold.

It’s important to consider that the correlation of miners to gold may change over time, and rising prices don’t necessarily mean an increasing correlation.

For ongoing updates on this industry, check Market Realist’s Metals and Mining page.


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