Analyzing Mining Companies’ Correlation with Gold

Gold’s influence

Precious metal prices’ revival in the last week has led to miners rebounding, with most mining companies performing positively. Gold is the most influential of the four precious metals, while silver, platinum, and palladium tend to track gold. The miners we’ve selected for our analysis are Alamos Gold (AGI), First Majestic Silver (AG), B2Gold (BTG), and Royal Gold (RGLD). Royal Gold has the highest correlation with gold YTD (year-to-date), while B2Gold has the lowest. 

The iShares Gold Trust ETF (IAU) and the iShares Silver Trust ETF (SLV), which closely track gold and silver, respectively, rose 0.33% and 0.47% yesterday.

Analyzing Mining Companies’ Correlation with Gold

Falling correlation

Over the past three years, AGI’s, AG’s, and RGLD’s correlation with gold has fallen. Meanwhile, BTG’s correlation has been mixed.

AG’s three-year, two-year, and one-year correlation with gold is 0.57, 0.55, and 0.48. This year, its correlation has been 0.59, which indicates that 59% of the time, AG has moved in the same direction as gold.

A lower correlation indicates that gold will likely have less influence on a company’s stock price. Often, we see that mining companies’ stock movement depends more on gold than any other factor.