How These Mining Stocks Correlate with Gold


Apr. 6 2018, Updated 8:09 a.m. ET

Correlation analysis

Mining stocks tend to move with gold prices. In this part of the series, we’ll look at the correlation between gold and four select mining stocks: First Majestic Silver (AG), B2Gold (BTG), Royal Gold (RGLD), and Goldcorp (GG). Among these miners, B2Gold has seen the lowest correlation with gold, and Goldcorp has the highest correlation on a YTD (year-to-date) basis. 

Mining funds also have a high correlation with gold. Gold and silver-based funds like the Physical Swiss Gold Shares (SGOL) and the Physical Silver Shares (SIVR) have also been closely tied to the performance of gold and silver, respectively. These two ETFs have a five-day loss of 0.84% and 1.3%, respectively. 

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Trend analysis

Over the past three years, AG and GG have seen their correlations with gold drop, while the other two miners have seen a mixed correlation to gold during that period. GG’s three-year correlation with gold is 0.74, and its one-year correlation is 0.64. A correlation of 0.64 indicates that 64% of the time, GG has moved in the same direction as gold. The rest of the time, its correlation was not coordinated with gold. RGLD’s correlation to gold increased from three years to two years and then fell.

Miners’ correlation trends with gold are a vital factor for investors to consider, as gold is the most crucial of the four precious metals. A change in gold typically impacts the other three precious metals as well as mining stocks. During major economic events such as interest rate hikes, these relationships become stronger and more prominent.


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