Meera Shawn

Silver has been falling over the past few years, despite surging demand for its industrial use. Fundamentally, silver seems to be strong due to rising demand and a year-over-year shortfall in its supply.

Polyus Gold International is the largest gold producer in Russia. It ranks among the top ten gold miners. It produced 1,696,000 ounces of gold in 2014.

When the Federal Reserve chair, Janet Yellen, testified to Congress on February 11, she affirmed the Fed’s consideration of negative interest rates. Under a negative interest rate scenario, investors would pay interest to the bank for holding their money.

Fears in the overall financial market about a Brexit, the possible exit of Britain from the European Union, have abated. This helped gold fall.

Gold prices plummeted on Wednesday, January 25, 2017, and gave the lowest close in recent weeks.

Gold and interest rates have a close inverse relationship. The higher the rate for Treasuries, the lower the demand for non-yield-bearing assets such as gold and silver.

Gold futures for August expiration fell 0.2% to settle at $1,270 an ounce after touching $1,263.8 on Wednesday, June 22.

India and China, the two largest consumers of gold, make up about 50% of gold’s global demand. Gold is treated more as a commodity in these two countries.

Goldcorp (GG), Yamana Gold (AUY), and Hecla Mining (HL) have fallen 4.1%, 15.7%, and 1.1% year-to-date, respectively. However, Gold Fields (GFI) has risen 14.6% year-to-date.

Most mining companies are trading below their 100-day moving averages. A few months ago, they were trading at discounts compared to their significant premiums.

Precious metals mining shares that have high correlations with gold include Royal Gold, GoldCorp, New Gold, and Newmont Mining.

For mining companies, 2016 brought a ray of hope. Gold had the best quarterly performance in 30 years and silver climbed to its 11-month high.

Palladium has seen six out of seven down trading days as of January 12. The recent stock market slump in China, which caused global tumult, hurt palladium.

Gold and silver have seen trailing-five-day losses of 0.9% and 2.7%, respectively. The reason behind the fall in the precious metals is the buoyancy of the equity markets and the gains in the US dollar.

Even though precious metals miners have seen a remarkable rally in their prices, many fund managers have begun unloading their holdings in gold equities.

India and China are close competitors for the title of number-one gold buyer. Together, the countries make up about 50% of the total global demand for gold.

Economic data from the United States on Tuesday, July 21, 2016, on home starts and building permits affected gold and other precious metals to a certain extent.

Mining stocks are often known to amplify the returns in precious metals. Small losses for metals can bring exponential losses to metal miners, and vice versa.

Compared to the substantial gains in precious metals on Tuesday, the gains yesterday were muted. How come?

Investments in the precious metals sector—including mining—substantially depend on the rate hike conundrum.

After surging to multimonth highs, gold slowly retreated to its original level. Gold fell from its overnight high, and equity markets rebounded from their fall.

Gold continues to trade at its five-year low. It’s hovering in the range of $1,100–$1,150 per ounce. Gold futures on COMEX lost 5.90% on a YTD basis.

Precious metals often run in the opposite direction of stocks. Whenever the risk appetite of investors is high, stocks tend to perform well.

The US dollar rose sharply on November 4. Precious metals have overall seen a volatile past month, but on November 4, palladium dropped the most by 12.10%.

Mining companies saw massive YTD rises in 2016 despite their poor performances in the last quarter. GDX saw a YTD rise of 21.4%.

India and China remain the top two consumers of gold (IAU) and silver (SLV).

Precious metals saw an upward swing on Tuesday, November 1, 2016. The rise in precious metals was most likely due to the slight fall of the US dollar.

Mining stocks with a higher correlation to precious metals will likely be impacted more by global indicators that influence precious metals.

The rise in precious metals over the last few months has been due to insecurity among investors, given the political climate.

As the Federal Reserve released minutes from its December meeting, gold prices jumped higher.

Janet Yellen, chair of the Federal Reserve, noted that the Fed is planning to change the annual stress tests it gives to US banks. The test results would reveal whether the banks can withstand a massive financial crisis.

Besides the attack on Syria, the latest rise in gold was also backed by dampened expectations that the Fed will raise interest rates soon.

Gold prices once again retreated on Friday, November 25, by $10.3 to close at $1,179 an ounce—the lowest level that gold has seen since February.

Randgold Resources, AngloGold Ashanti, Hecla Mining, and IAMGOLD have risen 30.7%, 17.9%, 13%, and 31.4% YTD, respectively.

The Fed kept interest rates unchanged at its July 27, 2016, meeting. Precious metals took guidance from it and most likely began looking forward to the Bank of Japan’s meeting.

The Federal Reserve is expected to raise the interest rate in its March 2018 meeting for what would be the sixth time since late 2015.

Investors were somewhat pessimistic about gold during the last quarter of 2016. Most of the fluctuations were due to the news of the interest rate hike.

Investors are cautious about investing in gold after the sudden surge over the past three months. The Market sentiment in gold seems to be far from bearish.

As gold rose initially, the revival in the equity markets shadowed the precious metal. Silver maintained its gains. It’s used as an industrial metal.

Despite the losses on February 26, the precious metals maintained substantial gains for February. Gold had the best month in almost four years.

A rate hike and the dollar are closely tied to each other since a higher interest rate would mean more money flowing into the United States.

As of April 18, 2017, gold and silver have risen 12% and 14.8%, respectively, year-to-date.

The iShares Silver Trust and the iShares Gold Trust have gained 2.9% and 0.91%, respectively, in the past five days, likely due to the precious metal rebound.

Eldorado Gold (EGO) is Canada’s second-largest gold mining company, whose price is trading at $2.22 per share as of January 28, 2016.

Among the 24 commodities listed on the S&P GSCI (Goldman Sachs Commodity Index), gold has been the best performer. It topped the chart among commodities.

For the first time in history, the price of ripple has surpassed $1.

First Majestic, New Gold, Agnico, and Silver Wheaton now have RSI scores of 60.5, 56.2, 57.6, 59.6, respectively.

Bitcoin prices touched a three-week high of $17,712.40 on January 6, 2018, and then fell. As of Monday, January 8, 2018, at 5:00 AM EST, it had a 24-hour fall of 5.4%.

Newcrest Mining is based in Australia. It’s engaged in the exploration, mining, and sale of gold and copper. It produced about 2,396,000 ounces of gold in 2014.

Over the past three years, Yamana has seen a rising correlation with gold, while AngloGold has seen a falling correlation to gold.

Recent global unrest and the equity market slump have weighed on silver while the haven appeal that has lifted up gold has also helped silver.

The RSI levels of our four select mining giants have all increased lately due to their higher stock prices.

Mining companies like First Majestic Silver (AG), Silver Wheaton (SLW), Pan American Silver (PASS), Coeur Mining (CDE), and Hecla Mining (HL) are primarily into silver exploration.

Between December 18 and December 22, Longfin and Riot Blockchain fell 76% and 49%, respectively.

Some investors seem to prefer putting their money in gold lately. The World Gold Council is optimistic on gold due to negative interest rate policies of major economies.

It’s expected that precious metal mining stocks will follow precious metals. So it’s crucial to know which stocks are closely associated with precious metals.

Large money managers and speculators were bearish on gold in 2015. Gold declined for three consecutive years. However, 2016 started with a bang.

As automobile catalysts comprise ~44% of the demand for platinum, the Volkswagen scandal curbed the demand for diesel-fueled cars that use platinum as a catalyst. This pulled down the already depressed platinum and comparatively strengthened palladium.

Often, haven bids for gold outnumber bids for silver. But the recent surge of silver has proved differently.

Slumping commodity markets are prompting miners to respond to lower asset prices. Major North American miners including Barrick Gold (ABX) have already put a few mines up for sale.

Platinum futures for April expiry fell by almost 5.4% over the first five trading days of 2016. Palladium futures for March expiry fell by 12.5% YTD.

With declining gold prices, the most famous gold ETF, the SPDR Gold Shares ETF (GLD), has also lost its allure. It’s trading at lower volume.

The gold-silver ratio was trading at 78.7 on Monday, April 11, 2016. The gold-silver ratio is trading close to its 100-day moving average.

A few of the macro indicators that affect gold and precious metals prices are the interest rate, inflation rate, trade balance, and the US dollar.

Gold saw such a surge in its price that the money flowing into funds like the SPDR Gold Shares (GLD) and the iShares Gold Trust (IAU) increased exponentially.

Indian jewelers have called off their 43-day strike, which began as a reaction to a 1% excise duty on gold jewelry.

During the past week, average hourly earnings, excluding the farming industry, were below analysts’ expectation of 0.10%.

Newmont Mining (NEM) is one of the leading gold miners. It contributes about 5.43% to the VanEck Vectors Gold Miners ETF (GDX).

The most important phenomenon impacting gold has been the hike in the US interest rate. Now, constant speculation regarding the timing of the next rate hike is driving gold returns.

The turbulence in worldwide markets has helped precious metals, especially gold and silver, to reach new highs that we haven’t seen in the last few months.

The Direxion Daily Gold Miners (NUGT) and the ProShares Ultra Silver (AGQ), both leveraged mining funds, both have recovered and jumped 19.4% and 24.9%, respectively, on a five-day trailing basis.

Sputtering gains in gold have lured investors and many Market analysts. Optimism for gold is remaining strong due to a probable delay in another interest rate hike by the Federal Reserve.

Gold had seen a prolonged bull run from the 2008 meltdown to the beginning of 2013 as fear, the expectation of inflation, and QE drove prices higher.

Bitcoin futures are now traded on the Chicago Board Options Exchange (or CBOE). Bitcoin initially traded at a $1,000 premium on the CBOE.

With a positive outlook for the US economy, there is little hope that precious metals will see a remarkable upward move. The strengthening US dollar is making gold investors jittery.

Gold prices (GC) for COMEX futures August delivery were down by 0.38% after a period that was characterized by rising negative trading sessions.

In the wake of the stabilizing economy, we have seen a downfall in precious metals that has been especially painful for gold investors.

Gold rallied in the new year and quickly touched the $1,200 mark on February 8, 2016. Gold lost almost 10.3% in 2015.

Gold prices edged higher once again on Friday, February 3, 2017. On February 2, gold touched $1,219.40 per ounce, its best price since November 2016.

The US dollar and precious metals are usually inversely related to each other.

As the price of gold rebounded on July 5, 2017, so did the stocks of many miners.

Precious metals mining stocks are tied to metals. In order to understand precious metals’ performance, it’s crucial to analyze precious metal companies.

Silver was the second best-performing precious metal in September, advancing by 11.40% on a 30-day trailing basis. But October has seen negative returns.

Silver has successively risen in the current year and is now the best-performing precious metal.

Many of the recent fluctuations in precious metals have been the result of speculation about the Federal Reserve’s interest rate stance.

Gold has been falling since touching its one-and-a-half month peak last week after Republican representative Donald Trump was elected president of the United States.

While Trump has continued to avoid giving specifics on his future economic policies, gold has begun to rise again. Gold hit a seven-week high on January 12.

Precious metal mining shares that have a high correlation with gold include Agnico-Eagle Mines, Alamos Gold, Hecla Mining, and Randgold Resources.

As the precious metals retreated on Friday after seeing gains over the past one week, the negative sentiment also affected the mining equities.

Gold and other precious metals plummeted on Friday. Gold, silver, platinum, and palladium fell by 0.54%, 0.42%, 1.4%, and 0.7%, respectively.

The rise in the haven bids in 2016 has caused a jump in the price of gold by close to 17%. However, silver has increased only 8.3%—almost half the rise in gold.

After the renowned bearish sentiment for gold, we saw a little hope on July 31, 2015. Physical gold and silver sales accelerated.

Though an increase in rates may initially dim the luster of the metal, after the hike, gold may soar, uninterrupted by looming fears.

Palladium has a greater industrial use, so it may closely associate with industrial sentiment rather than the sentiment for precious metals.

With the rally in precious metals, precious metal mining stocks benefited the most. Among the miners, the South African miners outperformed.

The current turmoil in the stock markets has hurt most market participants. Investors are thus opting for safer investments like gold and silver.

Gold and the US dollar have witnessed an almost inverse relationship over the past few years. The other precious metals have a similar inverse relationship to the US dollar.

China’s recent devaluation of the yuan by ~1.9% sent ripples through global equity markets. The yuan’s devaluation could have an adverse effect on the Fed’s possible interest rate hike.

US economic data that came out on Friday, July 8, 2016, had a significant impact on gold.

Most mining companies reversed their 2015 losses during the first few months of 2016 and had posted substantial gains. There is a high correlation between mining stocks and precious metals.