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The Silver Market: Fundamentals, Spreads, and More

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Part 6
The Silver Market: Fundamentals, Spreads, and More PART 6 OF 6

Comparing Mining Stock Volatility

Mining stock technicals

There are a few technical indicators to consider when analyzing the performance of mining stocks. While there are many important indicators that an analyst can monitor, we’ll focus on 14-day RSI (relative strength index) scores and implied volatility.

Comparing Mining Stock Volatility

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The SPDR Gold Shares ETF (GLD) and the iShares Silver Shares ETF (SLV) have risen 1.4% and 4.1%, respectively, on a five-day trailing basis. The volatility of mining funds is often higher than that of metal-based funds. As shown in the chart above, mining stocks’ trailing-30-day prices have fallen significantly due to the fall in precious metal prices. Most mining companies have fallen over the past month.

Implied volatility

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

On May 16, 2017, the implied volatility of Goldcorp (GG), Yamana Gold (AUY), Barrick Gold (ABX), and Buenaventura (BVN) stood at 29.2%, 45.9%, 30.2%, and 39%, 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 four aforementioned miners’ scores have all increased due to their higher stock prices.

Goldcorp, Yamana, Barrick Gold, and Buenaventura have RSI scores of 47.5, 50.4, 41.4, 55.9, respectively. These RSI scores have revived along with the companies’ stock prices. For ongoing updates on this industry, check Market Realist’s Metals and Mining page.

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