In this part of our series, we’ll look at the relationships that some miners have with the precious metals they mine. A correlation analysis can give us an idea about mining stocks’ price movements and how closely they’re tied to changes in precious metal prices.
Mining funds Sprott Gold Miners (SGDM) and Global X Silver Miners (SIL) have seen losses of 4.1% and 4.9%, respectively, over the last five trading days. These funds are closely tied to precious metals, just as mining companies are.
Silver Wheaton has seen the highest correlation with gold while Franco-Nevada has the lowest correlation. Among these four miners, Primero and Silver Wheaton have seen a positively trending correlation with gold while Agnico and Franco-Nevada experienced a mixed correlation trend.
Silver Wheaton has a three-year correlation of ~0.70 with gold and a one-year correlation of ~0.81, which suggests the stock has moved in the same direction as gold ~81.0% of the time over the past year. These correlations can move in different directions at different times.