How Miners Correlate to Gold



Miners’ correlation with gold

Gold is regarded as the most influential precious metal, and most miners follow its price trends. For our correlation analysis, we are comparing the mining stocks to gold. In this part of the series, we’ll look at Royal Gold (RGLD), Goldcorp (GG), Sibanye Gold (SBGL), and Gold Fields (GFI).

The past week was beneficial for precious metals and mining stocks like the VanEck MERK Gold Trust (OUNZ) and the PowerShares DB Gold Fund (DGL). They have risen 1.7% over the past five trading days. These funds have a high correlation to gold.

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Reading the trends

On a YTD (year-to-date) basis, Royal Gold has the highest correlation to gold, while Sibanye Gold has the lowest YTD correlation. The YTD correlation seems to be moderately lower than in previous years. 

Among the four miners that we are discussing, SBGL, GG, and RGLD have seen downward movement in their correlation to gold, while Gold Fields has seen a mix of upward and downward correlation movement.

The correlation of Royal Gold has dropped from a three-year correlation of 0.58 to a one-year correlation of 0.49. A correlation of 0.49 suggests that about 49% of the time, Royal Gold has moved in the same direction as gold over the past one year.

An understanding of how mining stocks correlate to gold is essential, as it provides insight into the future price movement of these miners.


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