Gold Miner Pulse (ext'd art.)

With graphs last updated on Dec 29, 2023

Publication policy: This extended version includes long term data. It is not going to be updated regularly. Fresh updates are posted (twice a month) on the (shorter) gold miner pulse page.  Previous releases of these detailed studies are kept in an archive.

Scope: This extended blog page is monitoring whether trends are persisting and/or how they are evolving. Therefore the graphs posted here are showing both daily observations  with a 6 months time horizon and some graphs with a 3 to 4 year time horizon. For the very long term reference frame, see the articles referenced at the bottom.

Unhedged Gold miners relative to Gold bullion 

Where are we today? 

(relative to the Mar 2020 trough and the 2020-23 highs)

	Last	Up_Min	Min	Max	Down_max	Relative Strength
Gold	2062.2	40.2%	1,270.4	2,077.2	-0.7%	98%	on date:
HUI	243.3	48.6%	147.6	363.9	-33.1%	40%	12/29/2023

HUI/Gold graph

HUI index relative to Gold over the last 6 months; the short (blue) moving average is over 50 days while the long moving average (red) is over 200 days, click to enlarge

How we got there:

Previous longer term and mid-term review has been posted on Jun 30: Gold Miner Pulse (archive) 

The situation back then:

Gold started 2023 in an uptrend just over $1800/Oz, the rally would soon stall at $1950 and by early February, the yellow metal weakened again. Even though the metal upheld $1800 well, most gains from the 2022 year-end rally, which carried through until end January vaporized. HUI/Gold bottomed on March 9, with the HUI at 211 even though gold kept firm at $1830/Oz. Less than a month later, on April 3, the yellow metal would break above $2000/Oz. No euphoria followed like on previous occasions. After the double top excursion above the symbolic $2000 threshold, gold weakened in the latter half of May and in June. However it upheld $1900/Oz. The HUI/Gold ratio slid nevertheless close to the level observed when gold was in the mid $1800's in February and March.

HUI/Gold ratio over the last 12 months:

HUI index relative to Gold over the last 12 months; the short (blue) moving average is over 50 days while the long moving average (red) is over 200 days, click to enlarge

And since:

The yellow metal strengthened until after mid July with miners following suit. Summer doldrums only started later on but there was no seasonal autumn rally. Gold eventually weakened and slid below $1900/Oz to bottom at $1860 on Oct 10. Miners were pummeled with the HUI index down to 199.1 on Oct 4. The gold recovery was swift with the metal rallying a first time to $2000 on Oct 27. One month later $2000 gold would be on the chart again determined to become the new norm. With only two NYMEX closes below $2000 ever since and one intraday peak above $2100. Not much enthusiasm among miners, with the HUI/Gold ratio barely up from its low, the HUI index is closing 2023 at 243.3. Gold is up 13% over the year eclipsing the poor 5.9% advance of the HUI.

Longer term graph

The below long term HUI/Gold graph proves that - over the last three years - there was a net loss in relative miner valuation, though the yellow metal advanced 8% over the below graph. Gold was in an uptrend until summer 2020 when it hit its all time high. The uptrend broke in autumn 2020, though miners started really diverging from gold only in the summer of 2021 when inflation started rising. The start of the Ukraine war was only a temporary tailwind interrupting the slide of valuations.

HUI index relative to Gold: weekly observations over the last 3 years leading into Dec 2023. The blue moving average line is over 26 weeks while the red moving average is over two years, click to enlarge

The HUI/Gold regression: a linear but non-proportional relationship between HUI and Gold puts HUI/Gold (or for that purpose Gold/XAU) as valuation parameter in a different perspective. The HUI index has been calculated since 1996.

Global X Silver Miners ETF (SIL) relative to silver bullion

SIL/Silver graph

Global-X Silver Miners ETF, SIL relative to silver bullion; Daily observations over 6 months. Click to enlarge

How we got there:

Situation from summer 2020  till end 2022.

Silver lost more than gold immediately after reaching its $30/oz peak in summer 2020. While its price  mostly remained between $20 and $25 till summer, we did experience silver weakness during late August and throughout much of autumn. Silver briefly dipped below $18 by end Aug/beginning of Sep.

Nevertheless the white metal recovered in tandem with gold, eventually even ending modestly up (2.9%) over 2022. The prolonged valuation decline of silver miners over 2022 was not silver price driven. Silver would initially hold up well early 2023 but then slide as gold weakened. The recovery March recovery rally brings silver back to $24.08 on March 31. The price barely changed over the quarter. The short 50 d moving average of the SIL/Silver ratio is now moving sideways. The long 200 dma still shows the past 2022 decline.

SIL/Silver ratio over the last year:

Global-X Silver Miners ETF, SIL relative to silver bullion; Daily observations over 12 months. Click to enlarge

Silver started 2023 just short of $24/Oz and would uphold this level while gold was strengthening during January. Weaker silver prices in February and March did not cause  a major slide, as silver upheld $20/Oz. Parallel with the gold recovery, silver would eventually break above $26/Oz early April. As it came off its peak, silver miners sold off, despite only moderate losses for the metal, ending the first half of 2023 at $22.76. The July rally brought silver back to $25. As gold retreated, so did silver: we saw $20.90 before the downtrend was broken. The gold rally inspired silver only little. We end the year at $23.78, down 0.8% over the year. Nevertheless, the SIL/silver ratio advanced significantly over the last month. Note that most silver miners have important other revenue streams: from gold, copper or other non-ferro metals.

SIL/Silver ratio over the last three years (weekly observations):

Global-X Silver Miners ETF, SIL relative to silver bullion; Weekly observations over 3 years. Click to enlarge

Over the complete observation period, silver is down from $26.37/Oz to $23.78/oz. Miners slid accordingly, though on the shorter graphs it seems a slide in slices. Only in December did the SIL/Silver ratio significantly break above its 26 weeks moving average, which halted its downtrend.

Canadian Gold and Silver Mining indices

How gold miners are performing is shown by the capitalization weighed gold miners index of stocks included in the Gold Miner Pulse database (yellow diamond symbols). Note that most quotes are in CAD, which has been fluctuating to the USD. The blue graph shows the GMP silver miners index. The long term depreciation of the loonie mitigated the miner loss during gold miner bear market.

The silver mining index was the first to break above parity, despite silver about flat from where we started over 10 years ago. After the June top, a lengthy slide brought the silver index back to 800. Ultimately the Christmas rally brought us back to 1000.

GMP list based (and capitalization weighed) gold (yellow dots), silver (blue) and equal weight (red) miners indices. Reference 1000 on Nov 19, 2010  (click to enlarge)

Note that the index calculation always is compensated for composition changes. 

How we got so deep into trouble is best illustrated when showing a long term graph (2010-17) of those capitalization weighted miners indices. The revival after late Jan 2016 healed the last leg down of the miner bear market. We briefly topped the May 2013-Oct 2014 trading range.

Long term graph of the GMP list based (and capitalisation weighed) gold (black), silver (blue) and equal weight (red) miners indices. Reference 1000 on Nov 19, 2010. - Data till Dec 29, 2017 (click to enlarge)

The silver miners index rose till 1400 in April 2011, peaking three weeks earlier than did the silver price. The silver miners index also posted a higher maximum during both the March 2014 and June to early August recovery than it did in the August 2013 recovery. The gold miners index and the equal weight index did not peak higher at any of the failing 2014-15 recoveries than they did in August 2013. By January 2016 silver miners nearly completely lost their edge relative to gold miners, yet the recovery proved more vigorous. The below long term graph covers over three years: the end of the bear market with miners bottoming by Dec 2015, the 2016 boom-bust over the tedious months early 2018, with miners unable to match gold strengthening. Miner quotes were jittery after gold plunged below $1200. Towards end 2018 gold strengthened to $1280 with miners recovering timidly. As gold broke above its trading range late spring 2019, miners started rallying. The 2016 miners boom euphoria didn't however repeat. The 2020 miners surge was driven by a substantial rise of precious metals with gold setting a new ATH above $2060 in August.

Mid term graphs: 

Continuation of the long term graph from 2017 till the end of 2020.

Mid term graph of the GMP list based indexes from Jan 2020 till end Dec 2023

Gold miners indexes are back to their pre COVID levels, when the metal prices were still substantially lower than where they currently are. This has translated into much lover relative valuations. The equal weight index progressed more, reflecting the outperformance of some juniors and the take-over of some junior and mid-tier miners. Silver miners also did better despite the metal not convincing but still up from the $18 where we started in Jan 2020.

Performance graph

There is an important performance disparity among the gold and silver miners of the GMP database.  Several laggards seem moribund. The median (or middle) miner (with an equal number better and worse) is now losing 57.17%: more than a double is needed to break even. The average emerged from the red now posting a 4.13% gain. The performance distribution is slanted towards the few high gains.

GMP Miners sorted by loss to gain since inception on Nov 19, 2010. Note that the top miners are left out to avoid excessive scale expansion Click to enlarge

There are 20 miners/explorers losing 90% or more, with 11 thereof down over 95%. At the opposite side 31 miners are quoting above their Nov 2010 mark, 14 stocks have doubled. The top 11 miners are omitted in the above graph to avoid excessive scale expansion, but you find the top-15 in full detail below:

GMP elite miners, sorted by gain since starting observations in Nov 2010 (logarithmic view with ticks 10% apart in the first decade and 100% in the top decade). Click to enlarge

A more detailed analysis including list composition changes, is found on the page "miners performance". The miners included in the database are classified in five performance quintiles. This allows evaluating how individual miners went with the herd or against the grid.

The contributor driven explorer and (junior) mining spreadsheet

Pooling efforts with any cooperative peers out there, I started the “contributor driven explorer and junior mining spreadsheet” end 2011. The idea is to get a selection of explorers, junior or mid-tier producers of gold and/or silver. This spreadsheet is updated weekly. Sector benchmarks (ETF's) were added since the very start.

Related blog articles

Several more detailed articles focusing on the longer term have been published. These are using the same approach as this blog page and still are a good read to grasp the historic perspective:

1. Miners relative to precious metals: a tactical approach; (July 2, 2012)
2. Miners relative to precious metals: An update on 2012;  (Jan 13, 2013)
3. Anatomy of a gold miner bear market (Dec 30, 2013)
4. Three year slide of precious metal miners (Dec 31, 2014)
5. Gold miner bear market starting its fifth year (Jan 3, 2016)
6. Precious metal miners relative to metal prices (Dec 31, 2016)
7. Precious metal mining in 2018: a dark cloud with a silver lining and 2019 outlook (29 Dec 2018)
8. Gold Miner Pulse 2019 (half-year update) (Jul 1, 2019)
9. Precious metal and miner 2019 overview and outlook for 2020. (Dec 31, 2019)
10. Gold Miner Pulse - Friday March 13 (Mar 13, 2020)
11. Gold Miner Pulse - October 2020 update (Oct 10, 2020)

During 2011-15 and even over the long haul, the relative performance of mining majors to the precious metals they produce was disappointing for major gold miners, even while the metals were in a solid uptrend.  See: Gold miners: three decades for naught or Decades of underperformance