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What’s the Correlation of Miners in 2018?

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Jul. 3 2018, Updated 1:30 p.m. ET

Gold’s influence

The revival in precious metal prices on Friday, June 29, caused a rebound in miners. The fall in metals on Monday once again caused mining stocks to plummet.

Gold is the most influential of the four precious metals. Silver, platinum, and palladium are known to closely track gold’s trends. The miners we’ve selected for analysis are Royal Gold (RGLD), Goldcorp (GG), Hecla Mining (HL), and Kinross Gold (KGC). Goldcorp has the highest correlation with gold YTD (year-to-date). Hecla has the lowest correlation YTD. 

The Global X Silver Miners ETF (SIL) and the VanEck Vectors Junior Gold Miners ETF (GDXJ) are the mining funds that also tend to closely track the performance of miners. They have seen YTD falls of 12.3% and 5.2%, respectively.

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Falling correlations

Over the past three years, KGC, HL, and RGLD have seen falling correlations with gold. However, GG has had a mix of increases and downtrends in its correlation to gold.

RGLD’s three-year correlation with gold has increased from 0.69 to a two-year correlation of 0.65. Its one-year correlation to gold is 0.51. It currently has a YTD correlation of 0.57, which indicates that 57% of the time since the start of 2018, RGLD has moved in the same direction as gold. The rest of the time, its movements haven’t correlated with gold’s movements.

A falling correlation indicates that gold has less of an influence on a company’s stock price. Often, we see that mining companies move in relation to gold more than any other factor.

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