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How Are Precious Metal Spreads Moving in 2017?

PART:
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Part 5
How Are Precious Metal Spreads Moving in 2017? PART 5 OF 6

How Are Mining Companies Performing in February 2017?

Mining companies have regained

Donald Trump’s recent victory in the US presidential election initially resulted in fear among precious metal investors. As those fears subsided, precious metals and mining stocks slowly started falling. The interest rate hike in December 2016 also played negatively for them, and precious metals and their mining companies kept falling.

Some investors expected choppy markets for precious metal mining companies after Trump’s victory, but that didn’t happen. Miners are often known to follow precious metals. Most of the time, they move in the same direction. So the recovery in precious metals took mining shares higher.

How Are Mining Companies Performing in February 2017?

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On a YTD (year-to-date) basis, Newmont Mining (NEM), Sibanye Gold (SBGL), Gold Fields (GFI), and the VanEck Vectors Gold Miners ETF (GDX) rose 9.2%, 23.8%, 11.0%, and 19.1%, respectively. New Gold (NGD) has fallen almost 17.1% YTD.

These mining companies also saw massive YTD rises in 2016, despite their poor performances in the last quarter. The VanEck Vectors Gold Miners ETF (GDX) also saw a YTD rise of 19.1%.

Technical indicators

The above four mining companies are trading close to their 20-day moving averages. However, they’re below their longer-term, 100-day moving averages. Newmont is the only stock that’s above its 20-day moving average. GDX is currently trading above its 100-day moving average. 

A substantial premium on a stock’s trading price suggests a potential fall in price. A discount could indicate a rise in price. Target prices for these four mining companies are significantly higher than their current prices, which suggests a positive outlook.

Most mining companies’ RSI (relative strength index) readings as of February 9, 2017, are lower than the past week due to their falling prices. GDX’s RSI level was close to 66. An RSI level above 70 indicates that a stock has been overbought and could fall, while an RSI level below 30 indicates that a stock has been oversold and could rise.

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