Reading Mining Stocks’ Other Technicals
While studying precious metal miners, it’s crucial to look at variables that analyze how attractive a particular mining share is or could be. The technicals we’ll look at here include RSI (relative strength index) scores and implied volatility.
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Implied volatility is a measure of the fluctuation in the price of an asset with respect to the changes in the price of its call option. On June 8, 2017, First Majestic Silver’s (AG), Agnico Eagle Mines’ (AEM), Royal Gold’s (RGLD), and Goldcorp’s (GG) implied volatility stood at 50.5%, 31.9%, 25.7%, and 29.7%, respectively. Mining companies’ volatility is often higher than precious metal volatility.
The 14-day RSI score measures whether an asset or stock is oversold or overbought. An RSI score above 70 suggests a price slump, while anything below 30 suggests a price gain.
Often, mining stocks’ RSI scores follow their price trends. First Majestic Silver, Agnico Eagle Mines, Royal Gold, and Goldcorp have RSI scores of 66, 27.4, 42.8, and 65.2, respectively.
When we analyze precious metal miners, it’s also crucial to study how they affect mining funds such as the Sprott Gold Miners ETF (SGDM) and iShares MSCI Global Gold Miners ETF (RING). These two funds have managed to rise 11.1% and 9.9%, respectively, year-to-date.