A Correlation Study of Miners to Gold


Dec. 12 2017, Updated 11:20 a.m. ET

Correlation analysis

A study of the correlation of mining shares to gold is crucial since it gives investors clues about the directional move of precious metal miners. Gold is the most eminent of the precious metals, and mining stocks tend to increasingly take their price changes from gold. In this part of the series, we’ll be taking a look at Buenaventura Mining (BVN), AngloGold Ashanti (AU), Hecla Mining (HL), and Kinross Gold (KGC).

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On a year-to-date basis, the correlation of miners to gold has been weak. AngloGold Ashanti has the highest correlation to gold on a YTD (year-to-date) basis, while Buenaventura Mining has the weakest correlation. BVN, HL, and KGC have seen downward trends in their correlations to gold over the past three years, while AngloGold Ashanti has seen a mixed trend.

Some funds also closely relate to the price changes in gold and the other three precious metals. The Global X Silver Miners ETF (SIL) and the VanEck Vectors Junior Gold Miners ETF (GDXJ) have fallen 3.8% and 4.5%, respectively.

Correlation analysis

Hecla Mining saw its correlation fall from a three-year correlation of 0.50 to a one-year correlation of 0.38. A correlation of 0.38 suggests that Hecla Mining has moved in the same direction as gold over the past year.

Miners’ correlation readings are often subject to change since miners can be volatile.


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