Silver Miner ETF's - A Benchmark

Silver miners are barely significant when compared to the gold mining sector, Despite doubling, gold miners remain but a niche market. With two Silver Miner ETF's this tiny sector is very well covered.

Gold miner bear market starting its fifth year

As we start a new year, it's time to make an update on the situation of gold and silver miners, using the approach you also find in the 'gold miner pulse' blog page and/or the miner performance page. Those pages have been updated with fresh information as of Dec 31st, 2015.
Several more detailed articles, using a similar approach, have been published (a good read for the more long term 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)

During 2011-13 and even over the long haul, the relative performance of mining majors to the precious metals they produce had been 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

This blog article has a time perspective covering years or decades, but is also monitoring whether the trends observed are persisting.

Miners back to square 1.

Ultimately the broad stock market rally ran out of steam. The S&P retreated from its all time high and now is back to 1982.8. Not that this makes any difference for precious metals. After another rocky week, the metals end mixed. Since Friday Sept 19, Gold is almost flat, while silver is down 0.7% over the week. After the lowest close since several years at $17.5 on Thursday, there is a timid recovery to end the week with. Main victim is Palladium ($772), which sold off quite rapidly after its recent multi-year high above $900. Platinum is taken down in the slipstream to $1297, with the gold-to-platinum ratio now up to 0.94 once again.

Precious Metal Mining ETFs: a benchmark

The 2013 cyclical gold bear market and the crash of precious metal mining stocks leaves investors shattered. Some have been lured in again during the early 2014 recovery, while others are waiting to get their toes wet. A few mining analysts left the scene, while many saw their audience dwindle. Investors with limited funds and/or time for a due diligence study may gain exposure to the precious metal mining sector through purchasing one of the exchange traded funds (ETF's).

Anatomy of a gold miner bear market

Last two years, we've witnessed a plunge of precious metal prices from before Christmas leading to the New Year. The relentless gold bear raids from mid April onwards, lead to a multi year low for gold on June 28 and the following recovery completely was wiped out with gold equalling the June 28 low on Thursday Dec 19. It seems the gold bear has gotten ahead of itself.

Much the same accounts for the miners, which ceased to leverage down precious metal prices last week and were vigorously reviving, despite meager gains for the metals. Over the short trading week leading to Friday Dec 27, gold added a timid 0.86% on the Comex close to end at $1213.80, while -after its major plunge- silver added 3.43% closing at 20.08. The HUI index of major gold and silver miners added 4.23% with the HUI/Gold ratio now up to 0.1633, hovering above its decade low.

Miners relative to precious metal prices - an update

The focus of this blog article 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.
Special attention is paid to the miners covered by the database 'Canadian gold and silver mining', for which a capital weighted index of gold- and silver miners is calculated. Aggregated performance is one thing, it's also very illustrative that miner and explorer performance has been diverging from outperforming the metals by a wide margin to losing ground completely.

Benchmark of Precious Metal Mining ETFs

A first glance: year-to-date graphs of :

1. GDX, Van Eck's large-cap Gold Mining ETF,
2. GDXJ, Van Eck's junior Gold Mining ETF,
3. SIL, the Global X Silver Mining ETF,
4. GLDX, the Global X Gold Explorer ETF.

Van kwaad naar erger met de zilvermijnen.

Het achterblijven van zilvermijnen bij de explosieve stijging van de zilverprijs
Gemeten naar de verhouding tussen de koers van de GlobalX zilvermijnen ETF SIL en de zilverprijs, zakken zilvermijnen steeds verder weg. Dit proces zet zich door bij een versnelde stijging van de zilverprijs! Dit is hoogst ongewoon. Sinds het begin van de goud/zilver bull markt in 2000, gaf bijna elke rally van de edelmetalen aanleiding tot met een hefboom stijgende goud- en zilvermijnen. De weinige uitzonderingen komen op conto van een dalende aandelenmarkt bij stijgende goud- en zilverprijzen. De correlatie van edelmetaalmijnen met de S&P500, kan in dat geval roet in het eten gooien. Hiervan is momenteel echter evenmin sprake.