Gold Miner Pulse

With graphs last updated on Jan 11, 2019
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.
NEXT UPDATE PLANNED ON Jan 18, 2019

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

Persevering weakness of the gold price, plunging below $1200 by mid August, wore out miner optimism. Technicians didn't enjoy the inverted head & shoulders pattern very long. Late October, miners plunged, despite precious metals keeping firm.

Gold rallying to $1247 early December made miners advance substantially. Though gold easing only little quickly reversed the trend. The on-off game continues with the HUI/Gold ratio unable to lock in a meaningful advance even though gold now posts over $1280.

Unhedged Gold Miners index HUI relative to gold bullion (spot market). Daily observations over 6 months - Click to enlarge
How we got there:
The last longer term review has been posted end December 2018: Precious metals mining in 2018: a dark cloud with a silver lining & 2019 outlook .

Recently the HUI/Gold regression (previously also called 'bear market logic'): a linear but non-proportional relationship between HUI and Gold has been described, which 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

In the first half year of 2018, silver miners reacted adversely to the silver price trend. Initially silver miners had shown some resilience despite metal weakness. Yet they didn't benefit from the early October silver recovery either. With the metal lingering on below $15/Oz, silver miners lost their edge. The mid December advance is mainly reflected the rally of streamer Wheaton Precious Metals. The SIL/Silver ratio turned south again, though silver broke above $15/oz.

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

How we got there:
The last longer term review has been posted end December 2018: Precious metals mining in 2018: a dark cloud with a silver lining & 2019 outlook .


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. It has been losing its edge lately.The long term depreciation of the loonie mitigated the miner loss during gold miner bear market.

GMP list based (and capitalisation weighed) gold (yellow dots), silver (blue) and equal weight (red) miners indices. Reference 1000 on Nov 19, 2010  (click to enlarge)
The third index added uses equal initial weights of all (silver and gold) miners from the GMP database. Because of its simple weighting scheme, comparing this index to the capitalization weighted indices gives a fair idea of how junior miners and explorers fare as compared to the large miners.
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.


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 Dec 28, 2018 (click to enlarge)

Performance graph
There is an important performance disparity among the gold and silver miners of the GMP database. Too many laggards seem moribund. The median (or middle) miner (with an equal number better and worse) is losing 71.08%: tripling doesn't bring you to break even. The average loss posts at 48.12% as the performance distribution is slanted towards the (few) high gains.

GMP Miners sorted by loss to gain since inception on Nov 19, 2010. Click to enlarge
There are 20 miners/explorers losing 90% or more, with 12 thereof down over 95%.  At the opposite side only 14 miners are still quoting above their Nov 2010 mark, led by Osisko Mining; 3 stocks have doubled. The top 4 miners are omitted in the above graph to avoid scale expansion, but you find the top-10 in full detail below:

GMP elite miners, sorted by gain since starting observations in Nov 2010 using a logarithmic view with minor ticks 10% apart in the bottom decade and 100% apart in the next 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 down with the herd... or withstood the tempest.


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)
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

Remarkably, during the gold miner bear market and it subsequent recoveries till summer 2017 the HUI - gold relationship followed a linear regression. Thereby the HUI slides dis-proportionally during any gold decline, but also shows the expected leverage at a gold advance. See for example:
Linear Regression between the Gold Price and the HUI miners index (April 2017)
In 2018 it became obvious that the HUI once more started lagging this observed relationship.

While these blog articles had a time perspective covering years or decades, the present blog page is monitoring whether the trends observed are persisting. Therefore the graphs posted here are showing daily observations year-to-date or with a 6 months time horizon.