How Miners Correlate to Gold
Mining funds that have a strong relationship to precious metals are the Global X Silver Miners (SIL) and the VanEck Vectors Gold Miners (GDX).
Oct. 12 2017, Updated 12:57 p.m. ET
![uploads///CORRELATION](https://media.marketrealist.com/brand-img/eXQegYUPm/480x251/uploads/2017/10/CORRELATION-3-2-1-1-1-1.png 480w, https://media.marketrealist.com/brand-img/eXQegYUPm/640x335/uploads/2017/10/CORRELATION-3-2-1-1-1-1.png 640w, https://media.marketrealist.com/brand-img/eXQegYUPm/768x402/uploads/2017/10/CORRELATION-3-2-1-1-1-1.png 768w, https://media.marketrealist.com/brand-img/eXQegYUPm/1024x536/uploads/2017/10/CORRELATION-3-2-1-1-1-1.png 1024w, https://media.marketrealist.com/brand-img/eXQegYUPm/1280x670/uploads/2017/10/CORRELATION-3-2-1-1-1-1.png 1280w, https://media.marketrealist.com/brand-img/eXQegYUPm/1440x753/uploads/2017/10/CORRELATION-3-2-1-1-1-1.png 1440w, https://media.marketrealist.com/brand-img/eXQegYUPm/1600x837/uploads/2017/10/CORRELATION-3-2-1-1-1-1.png 1600w, https://media.marketrealist.com/brand-img/eXQegYUPm/2160x1130/uploads/2017/10/CORRELATION-3-2-1-1-1-1.png 2160w)
Correlation analysis
As we analyze mining companies, a correlation study of the miners to gold is important. Gold is the most famous among the precious metals and is likely a price determinant of the directional move of silver, platinum, and palladium.
In this part of the series, we’ll analyze a few mining companies like Agnico Eagle Mines (AEM), Primero Mining (PPP), Silver Wheaton (SLW), and Franco Nevada (FNV).
Mining funds that have a strong relationship to precious metals are the Global X Silver Miners (SIL) and the VanEck Vectors Gold Miners (GDX). They have risen 6.1% and 12.7%, respectively, year-to-date.
Upward trends
Among the four miners that we’ve selected, Franco-Nevada has the lowest correlation with gold this year, while Agnico Eagle Mines and Primero Mining have higher correlations. Agnico, Silver Wheaton, and Franco-Nevada’s gold correlations have moved up over the past three years, while Alamos Gold’s correlation has fallen. Sibanye’s correlation has seen a mixed trend.
Franco-Nevada has a three-year correlation of 0.66 and a one-year correlation of 0.82. The correlation of 0.82 implies that ~82.0% of the time, Franco-Nevada has moved in the same direction as gold during the last one year.
A rise in correlation is an indicator that the price is more likely to track the directions of precious metals compared to equities in general.