Miners’ correlations with gold
Precious metal mining stocks tend to take their cues from gold prices. Gold is the most crucial of the four precious metals, and the other three metals follow gold most of the time. For our correlation analysis, we’ll look at Alamos Gold (AGI), First Majestic Silver (AG), New Gold (NGD), and Newmont Mining (NEM). Mining-based funds have a high correlation with precious metals. The VanEck Vectors Junior Gold Miners ETF (GDXJ) and the Sprott Gold Miners (SGDM) rose 1.9% and 2%, respectively, on Tuesday, due to the rebound in precious metals.
These four miners have had a reasonable correlation with gold on a YTD basis. Among the four miners, Newmont has the highest correlation to gold on a YTD basis.
AG and NGD have seen a downward correlation to gold over the past three years, while NEM and AGI have seen a mixed correlation to gold. AG’s three-year correlation of 0.59 fell to a one-year correlation of 0.49. A correlation of 0.49 indicates that about 49% of the time, AG moved in the same direction as gold. The rest of the time, AG’s correlation wasn’t related to gold.