How Are Miners’ Correlations to Gold Trending?

Mining stocks tend to take their cues from gold.

Meera Shawn - Author

Jan. 22 2018, Updated 1:35 p.m. ET


Miners’ correlation with gold

Mining stocks tend to take their cues from gold. For our correlation analysis, we’ll compare a few of the mining stocks to gold. In this part of the series, we’ll look at Randgold Resources (GOLD), Yamana Gold (AUY), Pan American Silver (PAAS), and Coeur Mining (CDE)

The past week has been beneficial for mining funds like the Global X Silver Miners (SIL) and the iShares MSCI Global Gold Min (RING). They were down 1% and 2.1%, respectively.  

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Reading the trends

Most mining stocks have risen over the past one month due to the revival in gold prices. It’s also crucial to study the relationship between miners’ price changes and gold. A correlation study of the selected miners over a span of three years can give us insight into whether miners will be affected by gold or not.

Among the four miners that we are discussing, CDE has seen a negative correlation with gold. Its correlation of -0.10 indicates that about 10% of the time, Couer Mining moves in the opposite direction as gold. In contrast, GOLD has the highest correlation to gold among these four miners.

The correlation of PAAS has dropped from a three-year correlation of 0.66 to a one-year correlation of 0.60. A correlation of 0.60 suggests that about 60% of the time, PAAS has moved in the same direction as gold over the past one year. Miners’ correlations are crucial to understanding the potential price movement of the selected miners.


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