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Gold miner pulse - October 2020 update

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Happy Thanksgiving to all Canadians

Graphs last updated on Oct 9, 2020
The main content of this article also is found on the regular weekly updated blog page: Gold miner PulseIts focus still is a tactical approach on how gold and silver miners perform relative to the price of gold or silver.
Whereas the blog page is monitoring whether trends are persisting, the present article is including a longer term perspective.  Therefore the graphs posted here are showing both daily observations with a 6 months time horizon, year-to-date graphs or weekly observations with a longer time horizon. For more articles covering the long term reference frame, see references at the bottom.

Unhedged Gold miners relative to Gold bullion

Where are we today? (relative to the May 2019 trough and the 2020 highs)






Relative Strength







on date:







Oct 9, 2020


Gold and white precious metals recovered, rallying towards the weekend. Miners ultimately also got traction. On balance, HUI/Gold bent up over the week, breaking above its 50 dma.
Unhedged Gold Miners index HUI relative to gold bullion (spot market). 

Daily observations over 6 months - 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.
Unhedged Gold Miners index HUI relative to gold bullion (spot market). 

Daily observations year-to-date - Click to enlarge

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.
From here onward, the first graph shows the better detail. 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 has been 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. Labour day didn’t bring about any major shift. Gold was recovering mid September, but the rally petered out and miners were not inspired. HUI/Gold was easing little over the latter weeks of September.

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.

The mid to long term perspective

The below graph shows weekly observations of the HUI/Gold with the moving averages covering 1 year (in blue) and 3 years ‘in red). The graph covers the period from Jan 2018 onward.

Unhedged Gold Miners index HUI relative to gold bullion (spot market). 

Weekly observations Jan-2018 till today - Click to enlarge

As we entered 2018, miners were systematically lagging gold. After precious metals had been selling off during summer, the HUI coupled with gold again, giving rise to a new regression line. HUI/Gold also started a much dented uptrend, with as most prominent features the orderly gold retreat during spring 2019 and the disorderly market implosion as the Corona frenzy hit the markets in March 2020.

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, this ratio started recovering, despite volatility of the metals, with silver taking a pretty nasty dive after Sep 21. Miners respond tepidly to the silver rally on Friday 9 Oct.

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

The Nov and Dec 2019 slide of precious metals -with silver back below $17- didn’t bring about a collapse of miners. Silver miners prove exceptionally resilient. As silver was nearing $17/Oz again, SIL/Silver remained well above its 200 dma, with the 50 dma having put a golden cross. After some hesitation silver miners again propelled higher as the metal kept 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 were disappointed that silver again kept 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 year-to-date graph. However as silver plunged beneath $12, miners shrugged off the extreme bearish stance and recovered with the general bear market bounce.

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

Silver had barely revived and the Au:Ag ratio remained extremely elevated (114 on May 1st).
After extremely volatile swings, the SIL:$Silver ratio entered into an uptrend. This is illustrating the remarkable silver miner resilience. The metal ultimately rallied, not only regaining its loss incurred during the Corona frenzy sell-off, but gaining traction towards $20/Oz. Nevertheless, the silver miner rally unraveled. After precious metals 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. However, miners aren’t convincing with SIL/Silver sliding in disbelief. Silver price volatility proves a setback for silver miner valuation.
The mid to long term perspective

The below graph shows weekly observations of the SIL/Silver with the moving averages covering 1 year (in blue) and 3 years ‘in red). The graph covers the period from Jan 2018 onward.

Global-X Silver Miners ETF, SIL relative to silver bullion; Weekly observations from Jan 2018 till now. Click to enlarge

As the Gold/Silver ratio was moving higher, Silver miners went through difficult days in 2018. Precious metals again were weak in spring 2019 with SIL/Silver taking another hit. Any subsequent rally was petering out again and as silver reached $18.6 in Feb 2020, the Corona crisis shook the markets. Silver miners tanked, but than recovered much faster than the metal.
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 19.1%: still way below break even. The average is posting a 22.3% 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 5 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, (again) led by Kirkland Lake; 17 stocks have doubled. The top 12 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 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 articlesSeveral 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


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