It's not exactly a well-kept secret that shares of gold mining stocks haven't kept pace with the price of gold, certainly not to the extent investors are accustomed to considering recent historical trends.
But it's just kind of odd that so many of the miner's share some similar pricing characteristics.
I was looking at shares of Goldcorp (GG) and plotted the price of the shares against the price of gold going back to early 2010.
Unfortunately, putting a regression line on a chart like this doesn't tell you much, especially when the correlation is so low. What's interesting is how Goldcorp has traded at the $35 level both then gold was around $1100 per ounce and around $1600 (shown by green arrows).
You can see this better if you plot the stock over time where you can see those green arrows correspond to April 2010 and just recently:
The purple line at the bottom shows the relationship between gold and Goldcorp. While gold traded at 30 times the price of the company's shares in 2010, gold now trades at 40 times the GG share price level.
This may be completely meaningless for any individual company. Does Goldcorp have specific issues? After all, these are companies we are talking about. Each can have their own unique earnings, hedging, and accounting nuances that cause shares to detach from a correlation to gold.
But Barrick Gold (ABX), Ashanti Anglogold (AU), and Newmont Mining (NEM) all seem to display similar patterns.
Here's a look at similar charts for these three stocks. (Note: All stocks were plotted against spot gold, not the SPDR Gold ETF (GLD))
Barrick Gold
Anglogold Ashanti
Newmont Mining
It's hard to believe that all four of these stocks (which account for roughly half of the Market Vectors Gold Miners ETF) would all display such similar patterns. All are trading at multi-year lows vs. gold itself.
I also took a look at these stocks in terms of price to sales ratio:
(Click to enlarge)
ABX Price / Sales Ratio data by YCharts
All are near decade lows.
Bargain basement opportunity? Perhaps, but I'm suspicious.
These stocks appear do highly correlated to each other, but not so correlated to the price of gold. In a future article I may look at some of the smaller gold miners. Perhaps they march to a different drummer.
Disclosure: I am long GLD.
