Correlation Study of the Top Miners and Gold



Miners’ correlations with gold

Gold is the most crucial precious metal. As a result, miners usually follow the trends in gold. In this part, we’ll discuss the correlations of New Gold (NGD), Newmont Mining (NEM), Sibanye Gold (SBGL), and Gold Fields (GFI).

The prices of mining-based funds are closely related to precious metals prices. The VanEck Vectors Gold Miners (GDX) and the Sprott Gold Miners (SGDM) have risen 3.3% and 5.4%, respectively, on a trailing five-day basis. The rebound is mainly due to a revival in precious metals after the downward movement in the past month. 

Reading the trends

Among the four miners that we’re examining, New Gold has the highest correlation with gold on a YTD (year-to-date) basis, while Sibanye Gold has the lowest correlation. On a YTD basis, most of the miners have witnessed downward price movement. Sibanye Gold, New Gold, and Newmont Mining have seen their correlations with gold fall in the past three years, while Gold Fields has seen mixed trends in its correlations with gold. 

Newmont Mining’s three-year correlation with gold is 0.61, while its one-year correlation has fallen to 0.50. A correlation of 0.50 suggests that about 50% of the time, Newmont Mining has moved in the same direction as gold in the past year. 

A correlation analysis of the mining companies to gold is important. It gives investors a brief idea about mining shares’ relative movement to gold. 

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