Q: How representative is the XAU for PM stocks ?
Frequently the XAU (and also HUI) Index is used as yardstick for the PM stocks.The question is, how representative is this index for the various PM stocks.
The XAU Index is a capitalization-weighted index composed of 16 companies involved in the gold and silver mining industry. XAU was set to an initial value of 100 in January 1979; options commenced trading on December 19, 1983.
XAU Composition/ weighting: XAU Composition/ Weigting- 16 comp's
Here we have listed the charts of the XAU and 3 Large PM Stocks (NEM, AU and GG) and 4 MidCap PM stocks (AEM, AUY, AZK, EGO).
Visually the XAU over the last year most closely resembles of GG and to lesser extent NEM and AU.
NEM and AU seem to be in a downtrend (with lower Highs and lower Lows over the last year).
It is true that the up/down turning points for the XAU also mark fairly well the up/ down turning points for the MidCaps.
AEM, AUY and AZK appear to be in uptrend (higher Highs, higher Lows).