Gold Miner Pulse

With graphs last updated on Sep 11, 2020
The focus of this blog page is on the gold and silver miners from a tactical point of view: how do PM miners perform relative to the price of gold or silver.

The blog page is monitoring whether trends are persisting. Therefore the graphs posted here are showing daily observations year-to-date or with a 6 months time horizon. For the 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 Aug 2018 trough and the 2019-20 highs)

Relative Strength
on date:
Sep 11, 2020


Gold has been been grinding lower four days out of five since Friday Sep 4 (incl), but the Wednesday rally made up for it all. HUI/Gold is flat over the week. Labour day didn't bring about any major shift.

Unhedged Gold Miners index HUI relative to gold bullion (spot market). 
Daily observations year-to-date - Click to enlarge

How we got there:
Previous longer term review has been posted end December 2019: Precious metal and miner 2019 overview and outlook for 2020.

HUI/Gold ended 2019 on a high, but gold rising because of political tension upon the elimination of Qassem Suleimani did not inspire miners. HUI/Gold slid to and broke below its 50 dma. The Vancouver Resource Investment Conference didn't inspire any recovery either. The yellow metal convincingly breaking above $1600 curbed the trend but the Corona virus frenzy slashed miners and precious metals. HUI/Gold plunged both beneath the 50 dma and the 200 dma. The surprise 50 bp FED rate cut launched gold higher again with miners briefly bouncing despite a tepid stock market response.

The stock market slide accelerated with precious metals giving way after peaking on Monday Mar 9. Tuesday's retreat was but a prelude for the slide that was to follow resulting in the capitulation on Thursday Mar 12 followed by another slide to end that horrendous week. (The overvalued) Palladium managed to implode over 20% on Thursday. Yet also Platinum and Silver which had been lagging for years also were beaten up. Miners were slaughtered, with the HUI/Gold ratio sliding. The Mar 13 graph made previous moves of the past six months seem like grating the ceiling. HUI/Gold abruptly plunged to its dec 2015 - jan 2016 bear market bottom on March 16. The Corona virus pandemic also causes unexpected mine closures pretty much across the globe. Several miners needed to revise production forecasts downward.

Despite a Friday sell-off, miners ended the week after Easter up firmly, keeping track of the escalating gold price. HUI/Gold finally bridged the gap with the pre-Corona level, with the HUI also exceeding its 2019 late summer top by April 24. Both precious metals and miners suffered a mid-week pull back but sentiment improved on Friday May 1. Despite gold flat over the first week of May, miners progressed modestly, making HUI/Gold rise to its highest value of 2020. After meandering around $1700, gold broke out on Thursday May 14. Miners blew off steam end May, especially the majors which most enjoyed the run-up after the Corona dip. Miners were to strengthen only towards end June.

Mid July the HUI/Gold ratio broke above its mid May high, but we needed gold steaming up to $1900 to make it happen. 

Gold rallied to close at a new ATH on Monday Aug 10; however miners were weakening with several missing on earnings after expectations were cranked up unreasonably high by sell side analysts. Miners don't seem to like fresh all time highs for the yellow metal nor gold recovering above $2000, since the HUI/Gold ratio is sliding in disbelief. 

Though the yellow metal had been weakening in anticipation to the Jackson Hole meeting of central bankers, it came out stronger. Miners also ended the week rallying. 

Precious metals have been weakening early September, leading up to Labour day. HUI/Gold more or less stayed put.

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

Last few weeks

SIL/Silver slid in disbelief after the silver price rallied nearing $30/Oz. Now, it more or less stays put, despite volatility of the metals.

Global-X Silver Miners ETF, SIL relative to silver bullion; Daily observations year-to-date. Click to enlarge

How we got there:

Previous longer term review has been posted end December 2019: Precious metal and miner 2019 overview and outlook for 2020.

Early to mid August, broad stock market weakness completely disrupted the uptrend among silver miners. Silver above $17 seemed having become a non-issue. SIL/Silver still is way below its March & July double top. The ratio fails regaining its 50 dma and is trending lower. A bearish cross was made as the 50 dma crossed below the 200 dma. A first step to recovery now should be SIL/Silver breaking above its declining 50 dma again; we needed silver regaining $18 to achieve this.  Remarkably the early Nov and Dec slide of precious metals -with silver back below $17- didn't bring about a collapse of miners. Silver miners prove exceptionally resilient. As silver is nearing $17/Oz again, SIL/Silver remains well above its 200 dma, with the 50 dma having put a golden cross. After some hesitation silver miners again propel higher as the metal keeps firming. SIL/silver peaked on Dec 30, 2019. Silver miners retreated with the broad market, despite metals firming 'for the wrong reason' (violence in Iraq and political tension). SIL/silver slid below its 50 dma. Investors are disappointed that silver again lagging gold, with the Au/Ag ratio again in excess of 86. The Vancouver Resource Investment Conference didn't lead to any recovery either. Silver regaining $18 brought some improvement but the Corona virus frenzy slashed both miners and precious metals.

Who was to predict silver to slide from $18.60 to $11.65 on less than four weeks time? The abrupt slide aggravated after mid March. Silver miners imploded, reaching bear market valuation as is shown on the new graph. However as silver plunged beneath $12, miners shrugged off the extreme bearish stance and recovered with the general bear market bounce.

Silver has barely revived and the Au:Ag ratio remains extremely elevated (114 on May 1).
After extremely volatile swings, the SIL:$Silver ratio entered into an uptrend. This is illustrating the remarkable silver miner resilience.

The metal ultimately rallied, regaining its loss incurred during the Corona frenzy sell-off. Nevertheless, the silver miner rally started losing steam. After precious metals again weakened early June, SIL/Silver slid beneath its rising 50 dma. 

Silver rallied to a fresh 7 year high to closing over $29/Oz on Aug 10. Miners aren't convincing with SIL/Silver sliding in disbelief. Silver price volatility proves a setback for silver miner valuation.

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 close to 10 years ago.

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 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. 

All 2016 data were dropped providing better detail on the mid/long term graph henceforth:

Mid/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  Sep 11, 2020 (click to enlarge)

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 losing 16.4%: still way below break even. The average is posting a 23.5% profit. The performance distribution is slanted towards the high gains.

GMP Miners sorted by loss to gain since inception on Nov 19, 2010. Note that the top 12 miners are left out to avoid excessive scale expansion Click to enlarge

There still are 6 miners/explorers losing 90% or more, with 2 thereof down over 95%. At the opposite side 37 miners now are quoting above their Nov 2010 mark, led by Aura Minerals; 17 stocks have doubled. The top 12 miners are omitted in the above graph to avoid excessive scale expansion, but you find the top-14 in full detail below:

GMP elite miners, sorted by gain since starting observations in Nov 2010 using a logarithmic view with ticks 100% apart - 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)
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