In this part of our series, we’ll analyze the correlation between gold and four mining stocks: Hecla Mining (HL), Kinross Gold (KGC), Eldorado Gold, (KGC), and Alacer Gold (ASR). Mining stocks tend to move with gold prices. Among these four miners under discussion, Kinross Gold has shown the highest correlation with gold while Eldorado is indicating a negative correlation to gold on a YTD or year-to-date basis.
Mining funds also have a high correlation with gold. The iShares Global X Silver Miners (SIL) and VanEck Vectors Junior Gold Miners Fund (GDXJ) rose 2.2% and 1.2%, respectively, on April 5. However, these funds also saw a YTD loss of 5.8% and 6.1%, respectively.
EGO’s and HL’s correlation with gold has dropped over the past three years while ASR’s and KGC’s correlation has been mixed. HL’s three-year correlation with gold is 0.59, whereas its one-year correlation is 0.45. A correlation of 0.45 indicates that ~45.0% of the time, HL has moved in the same direction as gold over the past year.
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. However, what we saw on Thursday shows that precious metals closely tracked silver price movements rather than gold.