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Why Precious Metals Tumbled on Friday, July 7

PART:
1 2 3 4 5
Part 5
Why Precious Metals Tumbled on Friday, July 7 PART 5 OF 5

How the Indicators of Precious Metal Miners Are Moving

Tumbling prices

The changes in precious metals are critically important to miners. There’s a strong relationship between these beloved metals and mining shares.

In this part of the series, we’ll look at some important technical indicators for major miners such as Pan American Silver (PAAS), Barrick Gold (ABX), Buenaventura Mining (BVN), and AngloGold Ashanti (AU).

How the Indicators of Precious Metal Miners Are Moving

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Implied volatility

Let’s look now at miners’ call-implied volatilities, which is a measurement of the changes in an asset’s price with regard to changes in the price of its call option. On July 7, 2017, Pan American Silver, Barrick Gold, Buenaventura Mining, and AngloGold Ashanti had implied volatilities of 38.6%, 33.2%, 42.2%, and 42.4%, respectively.

Let’s not forget that the volatilities of mining shares are often greater than the volatilities of precious metals.

RSI indicator

The relative strength index (or RSI) measures whether stocks are overbought or oversold. If a stock’s RSI level is above 70, it may be overbought, and chances are the price may correct downward. However, if its RSI level is below 30, it may be oversold, and it could be a candidate for an upward correction in price.

The RSI levels of the above-mentioned miners have recently witnessed revivals. Pan American Silver, Barrick Gold, Buenaventura Mining, and AngloGold Ashanti have RSI levels of 38.7, 44.2, 54.7, and 35.8, respectively.

The iShares Gold Trust (IAU) and the iShares Silver Trust (SLV) also have high correlations to precious metals. These two funds rose 1.0% and 2.8%, respectively, on Friday, July 7, 2017.

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