The Silver Market: Fundamentals, Spreads, and More

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Part 4
The Silver Market: Fundamentals, Spreads, and More PART 4 OF 6

Could Mining Stocks See a Revival?

Mining stocks react

Precious metal prices have fallen suddenly and considerably since mid-April 2017, along with precious metal mining stocks and funds. However, precious metals’ revival over the past week has been beneficial for mining companies. Precious metal investors remain concerned about the potential impact of any further interest rate hikes by the Fed.

Could Mining Stocks See a Revival?

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YTD (year-to-date), Sibanye Gold (SBGL) and Gold Fields (GFI) have risen 21.6%, and 20.9%, respectively. However, New Gold (NGD) and Newmont (NEM) have fallen 2.6% and 0.94%, respectively. Precious metals’ slump in April and early May was harmful to most mines. Meanwhile, the VanEck Vectors Gold Miners ETF (GDX) has risen 9.8% YTD.

Technical indicators

The four miners mentioned above are trading above their short-term 20-day moving averages. Sibanye and Gold Fields are also trading at a premium to their 100-day moving averages. A substantial premium on a stock suggests a potential fall in its price, while a discount suggests a rise. The target prices of all four of these mining stocks, except Gold Fields, are significantly higher than their current prices, suggesting a positive outlook.

RSI scores

When a stock’s RSI (relative strength index) score is above 70, it indicates that it has been overbought and could fall. However, an RSI score below 30 indicates that a stock has been oversold and could rise. Mining companies’ RSI scores appear to be slowly rising.


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