A Look at the Correlation of Precious Metal Miners


May. 9 2018, Published 2:31 p.m. ET

Correlation analysis

In this final part of the series, we’ll look at the correlation between gold and four mining stocks: Randgold Resources (GOLD), Yamana Gold (AUY), Coeur Mining (CDE), and Barrick Gold (ABX). Mining stocks generally move with gold prices. Among these four miners, Yamana Gold has shown the highest correlation with gold this year, while Randgold has the lowest correlation on a year-to-date basis.

Mining stocks are highly correlated with gold. The Physical Swiss Gold Shares ETF (SGOL) and the Physical Silver Shares ETF (SIVR) tend to closely track gold and silver, respectively. SGOL has fallen 0.51%, while SIVR has increased 0.88% over the past five trading days. 

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Correlation readings

Over the past three years, ABX and GOLD have seen a declining correlation to gold, while CDE and AUY have seen mixed correlations to gold. ABX saw its three-year correlation to gold fall from 0.73 to a two-year correlation of 0.72 and then to a one-year correlation of 0.57. A correlation of 0.57 indicates that about 57.0% of the time during the last year, ABX moved in the same direction as gold. The rest of the time, it wasn’t correlated to gold.

Miners’ correlation with gold is a crucial factor for investors to consider, as gold is the most dominant of the four precious metals. Fluctuations in gold impact the other three precious metals as well as mining stocks.


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