How Are Miners Correlated to Gold in 2018?


Mar. 29 2018, Published 1:40 p.m. ET

Correlation analysis

In this part, we’ll analyze the correlation between gold and four mining stocks: Yamana Gold (AUY), Pan American Silver (PAAS), AngloGold Ashanti (AU), and Hecla Mining (HL). Mining stocks tend to move with gold prices. This year, AngloGold has shown the highest correlation with gold, while Hecla Mining has shown the lowest correlation.

Mining funds also have a high correlation with gold. The iShares Global X Silver Miners (SIL) and the Sprott Gold Miners ETF (SGDM) rose 1.3% and 1.7%, respectively, on March 28, 2018. However, these funds also have a YTD loss of 7.8% and 6.6%, respectively. 

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Correlation readings

PAAS’s, AU’s, and HL’s correlation with gold has dropped over the past three years, while AUY’s correlation has been mixed. AU’s three-year correlation with gold is 0.73, whereas its one-year correlation is 0.45. A correlation of 0.45 indicates that ~45.0% of the time, AU has moved in the same direction as gold over the past one year. AUY’s two-year correlation to gold is 0.70, while its one-year correlation is 0.71.

Miners’ correlation trends with gold are a vital factor to consider for investors, as gold is the most prominent of the four precious metals. A change in gold impacts the other three precious metals as well as mining stocks. As seen on Wednesday, gold and silver influenced most mining stocks’ movement. Mining stocks fell as precious metals tumbled.


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