How Mining Stocks Correlate to Gold



Mixed performance

Whenever investors are considering investments mining stocks, they should look at the correlations of those miners to gold. Miners are more closely related to gold and silver than to the overall equity markets. Below, we’ll analyze First Majestic Silver (AG), New Gold (NGD), Newmont Mining (NEM), and Sibanye Gold (SBGL).

Mining stocks are also closely related to the metals. Some of the funds that rise and fall with gold and silver include the Physical Swiss Gold Shares (SGOL) and the Physical Silver Shares (SIVR). These two have YTD gains 10.6% and 3.9%, respectively.

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Correlation trends

Among the mining stocks that we’re discussing in this series, Newmont Mining has the lowest correlation with gold over the past year, while New Gold has the highest correlation.

Over the last three years, only New Gold has seen a rising trend in its correlation to gold, while Newmont Mining’s correlation to gold fell. Sibanye and First Majestic have seen a mixed trend in its correlation to gold.

New Gold has a three-year correlation of 0.67 to gold and a one-year correlation of 0.88 to gold. A correlation of 0.88 suggests that almost 88.0% of the time during the past year, New Gold has moved with gold.


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