What is the XAU Precious Metals Index?

Published by Thomas Herold in Economics, Investments, Trading

'XAU Precious Metals Index' is explained in detail and with examples in the Economics edition of the Herold Financial Dictionary, which you can get from Amazon in Ebook or Paperback edition.

The XAU precious metals index proves to be a stock shares index which trades on the United States’ based Philadelphia Stock Exchange. This index is comprised of 29 different precious metals mining firms. Though there are 29 participants in the index, the index is heavily dominated by only the three largest of them. These three overwhelming players are mega-gold mining companies Barrack-Placer, Newmont Mining, and Anglo Gold Ashanti. Between the three of them, they represent over half of the entire index.

As of May 5, 2017, the 29 companies comprising the XAU precious metals index were as follows: Agnico Eagle Mines Limited, Anglo Gold Ashanti Limited, Barrick Gold Corporation, Coeur Mining Incorporated, Compania de Minas Buenaventura, El Dorado Gold Corporation, First Majestic Silver Corporation, Freeport-McMoran Incorporated, Gold Fields Limited, Gold Resource Corporation, Goldcorp Incorporated, Harmony Gold Mining Company Limited, Hecla Mining Company, Iamgold Corporation, Kinross Gold Corporation, McEwen Mining, New Gold Incorporated, Newmont Mining Corporation, Nova Gold Resources Incorporated, Pan American Silver Corporation, Primero Mining Corporation, Rand Gold Resources Limited, Royal Gold Incorporated, Sandstorm Gold Limited, Sea Bridge Gold, Silver Standard Resources Incorporated, Silver Wheaton Corporation, Still Water Mining, and Yamana Gold Incorporated.

Back in 2006, the Philadelphia Stock Exchange expanded its XAU precious metals index and grew the exposure beyond the traditional North American, British, South African, and Australian based miners to include significant exposure to Eastern Europe, South America, and Russia. They did this by adding in another four mid cap and small cap companies that had gold mining properties in those three parts of the world. At the same time, Placer Dome was acquired by Barrick Gold and became removed from the index.

The four new companies which they added to this important precious metals index were Royal Gold Incorporated, Rand Gold Resources Limited, Couer D’ Alene Mines Corporation, and Bema Gold Corporation. Bema Gold Corporation was later acquired by Kinross Gold Corporation and subsequently became delisted from the XAU precious metals index. It is not terribly surprising that Canadian Bema Gold Corporation was taken over, as even in the heyday of rising gold prices back in 2005, Bema proved to be an anomaly in the gold mining world as it represented one of the only gold companies on earth to lose money in the booming gold price days of the mid 2000’s.

The development of adding additional gold mining company exposure to Russia, Eastern Europe, South America, and Australia came about because of geographical leadership changes in both the gold and silver mining industries. The XAU precious metals index has long been the most closely studied and heavily watched bell weather of gold mining company shares. It outperformed the overall stock markets in the first five years of the new millennium, and managed to triple in market cap and overall share pricing from 2001 to 2005.

The Philadelphia Stock Exchange allows trading of the XAU precious metals index every Monday through Friday from 9:30am until 4pm local Philadelphia time. This index has only one serious rival in the world of gold mining companies’ indices. This is the HUI Index listed as the AMEX Gold BUGS Index. The two indices represent the world’s most closely followed precious metals composites.

There has occasionally been some confusion with the name XAU precious metals index. This is because XAU also denotes a single ounce of gold. Thanks to the ISO 4217 currency standard, the symbol became representative of the yellow metal itself.

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The term 'XAU Precious Metals Index' is included in the Economics edition of the Herold Financial Dictionary, which you can get from Amazon in Ebook or Paperback edition.