Middle East is still the talk of interest in the commodity markets and the markets have been experiencing substantial volatility over the past weeks. Commodity markets also followed the trend and witnessed highs; Brent traded above US$115 a barrel while gold continues as a safe haven for investors with prices above $1400 per ounce. Apart from geopolitical speculations, precious metals have influenced by currency and stock market moves. Before talking explicitly on these factors, it would be interesting to have a look at the correlation matrix featuring gold and silver correlations – what it has to say about precious metals and its relationship between currencies/stocks. Based on correlation, strength in relative moves in precious metals market can be foreseen. From the below correlation matrix, we derive three significant links in the medium term. These are Silver/S&P, CDNX (in USD)/S&P, and HUI/Gold. Gold and Gold stocks being highly correlated is, of course, no surprise. Since the general stock market is verifying a breakout at this point, the implications upon silver and juniors is bullish.

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