Mining shares tend to move with gold prices. For our correlation analysis, we’ll compare gold with these four mining stocks: Agnico-Eagle Mines (AEM), Buenaventura Mining (BVN), AngloGold Ashanti (AU), and Hecla Mining (HL).
Mining funds are also known to have a high correlation with gold. The iShares MSCI Global Gold Miners (RING) and the Global X Silver Miners ETF (SIL) have fallen 6.4% and 3.4%, respectively, during the last five trading days.
The correlation reading of these miners on a YTD (year-to-date) basis is strong. A smaller sample size under consideration could have been a reason for the correlation readings.
On a YTD basis, AngloGold has a correlation of 0.96 to gold, while Agnico-Eagle Mines’ correlation is 0.80.
All four of these miners have seen their correlations to gold decline over the past three years. For example, Agnico-Eagle Mines’ correlation has fallen from a three-year correlation of 0.77 to a one-year correlation of 0.64. A correlation of 0.64 indicates that about 64% of the time over the past year, Agnico-Eagle Mines has moved in the same direction as gold.
The trend of correlation to gold is vital since gold is the most crucial of the four precious metals. A change in gold influences not only other precious metals but also mining shares.