How Are Miners Keeping Track of Precious Metals?
Metals lead miners
The performance of mining company shares typically stems from how equities and precious metals perform. At the same time, global implications such as the Federal Reserve’s interest rate hike, political stability, and market uncertainty also play significant roles in determining the prices of mining shares, just as they impact precious metals like gold and silver.
Any rise or fall in precious metals often results in amplified reactions among mining stocks, and often, an increase in gold leads to increases in gold-mining stocks, and vice versa.
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Due to the rises and falls witnessed by precious metals since the beginning of 2017, mining shares have also experienced volatility. New Gold has seen a YTD (year-to-date) fall of 18%, whereas the other three miners in our select group—Sibanye, Gold Fields, and Agnico—have seen YTD rises of 19.7%, 16.3%, and 2.5%, respectively, as of March 20.
Notably, all four of these stocks are trading at discounts to their long-term moving averages—except for Gold Fields, which is trading at a premium to its short- and long-term moving average. Considerable discounts to these averages could indicate upward price corrections, while significant premiums could indicate downward price corrections.
Analysts’ target prices for these mining stocks are significantly higher than their current prices, which likely points toward upcoming price rises. Specifically, the RSI (relative strength index) level of the Global X Silver Miners (SIL) is close to 47, while the miners in our select group have RSIs that are in the 50–60 range.