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In What Direction Are Precious Metals and Miners Moving?

PART:
1 2 3 4 5
Part 4
In What Direction Are Precious Metals and Miners Moving? PART 4 OF 5

What Miners’ Technical Indicators Suggest

Precious metal funds

As investors analyze which mining stocks are most closely linked to gold, it’s also important that they consider miners’ technical indicators. There are many important indicators that an analyst can look at. In this article, we’ll focus on RSI (relative strength index) scores and implied volatility.

What Miners&#8217; Technical Indicators Suggest

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The SPDR Gold Shares ETF (GLD) and the iShares Silver Trust ETF (SLV) have increased 3% and 1%, respectively, on a trailing-30-day basis. As shown in the graph above, some miners have seen high trailing-30-day returns due to a revival in precious metal prices.

Implied volatility

Call-implied volatility takes into account the changes in an asset’s price due to variation in the price of its call option. During times of global and economic turbulence, volatility rises.

As of April 17, 2017, Coeur Mining’s (CDE), Barrick Gold’s (ABX), Kinross Gold’s (KGC), and Eldorado Gold’s (EGO) volatility stood at 58.3%, 37.8%, 47.7%, and 50.6%, respectively. Mining companies’ volatility is often higher than precious metals’ volatility.

RSI scores

A 14-day RSI score above 70 suggests that a stock price may fall, whereas a score below 30 suggests that a stock price may rise. The RSI scores of the four mining giants mentioned above have all risen due to higher stock prices.

Coeur, Barrick, Kinross, and Eldorado have RSI scores of 86.4, 53.5, 76.8, and 76.8, respectively. The RSI scores have risen along with the miners’ stock prices. Most miners are trading close to 70. The 30-day-trailing returns of these miners have also improved substantially.

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