How Correlated Are Gold and Silver Miner ETFs to Spot Gold and Silver Prices?

Backtest results

The following backtest covering monthly returns from May 2020 to May 2025 shows that while gold and silver miner ETFs are reasonably correlated with their underlying bullion counterparts, they are far from perfect substitutes.

The Global X Silver Miners ETF

shows a correlation of 0.81 with the iShares Silver Trust

SLV

+2.69%

, while the VanEck Gold Miners ETF

GDX

+4.48%

has an even tighter 0.82 correlation with SPDR Gold Shares

GLD

+2.03%

. That means their returns generally move in the same direction over time, but not perfectly.

Where the difference really shows is in volatility and performance. SIL and GDX both exhibit annualized standard deviations over 34%, compared to just 15.76% for GLD and 30.55% for SLV.

That elevated volatility likely played a major role in dragging down their annualized returns—0.71% for SIL and 0.91% for GDX—versus 3.35% and 6.63% for SLV and GLD, respectively.

In short, if you’re buying miner ETFs expecting them to mirror the performance of spot metals, you might be taking on far more risk for less return.

What causes this discrepancy?

The discrepancy between miner ETFs and spot metal ETFs stems from fundamental differences in the underlying assets. While gold and silver miners are influenced by the prices of the metals they produce, they're also operating businesses—with all the complexity, costs, and risks that come with it.

Take a typical gold or silver mining company. The process starts with exploration, which is expensive and often fruitless. Then comes development: building out the mine, securing permits, arranging financing.

Once operational, the company has to extract ore, process it, and refine it. That ore needs to be transported, sometimes across borders, and sold into global markets.

Along the way, miners face risks like fuel costs, labour disputes, environmental regulations, weather disruptions, and fluctuating demand from industrial buyers.

All these layers introduce friction, which means mining stocks don't respond to precious metal spot prices in a clean 1-to-1 fashion.

Instead, what you get is embedded operating leverage: when metal prices rise, profit margins for miners can expand rapidly, but when prices fall, those same companies bleed even faster due to high fixed costs.

That leverage creates volatility, which is clearly visible in the much higher standard deviations seen in miner ETFs versus spot precious metal ETFs.

This volatility also hurts compounding. Thanks to the difference between the arithmetic mean (average return) and the geometric mean (compounded return), higher drawdowns reduce your long-term CAGR.

The more a stock or ETF swings up and down, the harder it is for gains to offset prior losses, so miner ETFs may underperform spot ETFs over long periods. And this is exactly what has happened over the precious decade.

The key takeaway

If your goal is long-term buy-and-hold exposure that closely tracks the price of gold or silver, your best bet is a physically backed bullion ETF like GLD or SLV.

These funds hold actual metal in custody and aim to reflect spot price movements with minimal tracking error, aside from expense ratios and bid-ask spreads.

For a short-term tactical bet on rising gold or silver prices, miner ETFs like GDX or SIL can offer amplified upside. They’re often easier to access than margin, futures, or leveraged products, and provide embedded leverage through their operating exposure to metal prices.

But the longer you hold them, the more likely their performance will diverge from spot prices due to volatility, operational risks, and drawdowns.

Both have use cases, but they aren’t perfectly interchangeable, despite what some might assume. So, if you're considering them as a tax-loss harvesting pair, just know that while they may pass the wash-sale rule, they could still be poor substitutes in practice.

Please note that this article reflects the author’s personal views and does not represent the opinions of the publication or its affiliates. It is for informational purposes only and does not constitute investment advice. It is essential to seek guidance from a registered financial professional before making any investment decisions.