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How Will the Fed Meeting Impact Precious Metals?

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Part 4
How Will the Fed Meeting Impact Precious Metals? PART 4 OF 5

Mining Stocks: Analyzing Relative Strength Indexes

Technicals

The chances are that mining stocks closely track changes in precious metals. When investors intend to park their money in miners, there are a few technical indicators they need to analyze.

In this article, we’ll look at some crucial technical indicators—including volatility figures and RSI levels for major miners Pan American Silver (PAAS), Kinross Gold (KGC), Eldorado Gold (EGO), and IamGold (IAG)

Mining Stocks: Analyzing Relative Strength Indexes

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Implied volatility

Call-implied volatility is a tool for measuring fluctuations in asset price when it comes to changes in the price of its call option. On September 19, Pan American, Kinross, Eldorado, and IamGold had volatilities of 39.1%, 39.4%, 52.5%, and 47.4%, respectively. Volatility in mining stocks is often greater than the volatilities of precious metals.

RSI levels

An RSI (relative strength index) measures whether a stock has been overbought or oversold. If a stock’s RSI is above 70, it may be overbought, and its price may fall. If a stock’s RSI is below 30, it could be oversold and might correct upward.

The RSI levels for the miners mentioned above have recently undergone some revival. Pan American, Kinross, Eldorado, and IamGold have RSIs of 39.1, 53.9, 61.0, and 48.6, respectively. The recent drop in stock prices led to a considerable fall in RSIs.

Mining funds Vaneck Vectors Gold Miners (GDX) and iShares MSCI Global Gold Min (RING) have fallen 3.5% each over the past month, thanks to falling precious metals.

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