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Miners’ Correlations and How They’re Moving in April

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Correlation analysis

In this part of our series, we’ll look at the correlation between gold and four mining stocks: B2Gold (BTG), Royal Gold (RGLD), New Gold (NGD), and Newmont Mining (NEM). Mining stocks mostly move with gold prices, but not always. Among these four miners, Newmont has shown the highest correlation with gold this year, while B2Gold has seen a negative correlation. 

Mining stocks are highly correlated with gold. The ETFS Physical Swiss Gold (SGOL) and the ETFS Physical Silver (SIVR) tend to closely track gold and silver. These funds fell considerably on Monday due to heavy gold and silver losses. They fell 0.81% and 2.9%, respectively, on Monday.

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Correlation readings

Over the past three years, New Gold has seen its correlation with gold fall, while the other three miners’ correlations with gold have been mixed. NEM’s three-year correlation with gold is 0.68, and its two-year correlation is 0.75, while its one-year correlation is 0.71. A correlation of 0.71 indicates that ~71% of the time in the last year, NEM has moved in the same direction as gold. The rest of the time, its correlation was unrelated to gold.

Miners’ correlation trends with gold are a crucial factor for investors to consider because gold is the most prominent of the four main precious metals. Changes in gold impact the other three precious metals as well as mining stocks.

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