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Economic Numbers, Monetary Policies Are Juggling Precious Metals

PART:
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Economic Numbers, Monetary Policies Are Juggling Precious Metals PART 1 OF 3

Making Your Way through a Few Technicals for Miners

Technical analysis

The precious metal market includes miners, which are a crucial part of the analysis. Investors who consider investing in miners should watch key indicators such as RSI levels and call-implied volatility. The volatility of mining shares is often known to be more than that of the metals themselves.

In this part of the series, we’ll look at Goldcorp (GG), Silver Wheaton (SLW), Barrick Gold (ABX), and Eldorado Gold (EGO).

Making Your Way through a Few Technicals for Miners

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Call-implied volatility

On October 4, 2017, Goldcorp, Silver Wheaton, Barrick Gold, and Eldorado had implied volatility readings of 28.9%, 30.8%, 29.1%, and 50.4%, respectively. Call-implied volatility measures the fluctuations in the price of an asset, given the fluctuations in the price of the call option.

Relative strength index

An RSI (relative strength index) level shows whether a stock is overbought or oversold. If a stock’s RSI score is higher than 70, it may be overbought, leading the price to soon correct downward. If a stock’s RSI score is lower than 30, it could be oversold and may rapidly increase.

The above mining stocks’ RSI scores have recuperated recently. Goldcorp, Silver Wheaton, Barrick Gold, and Eldorado have RSI scores of 45.5, 46.5, 33.8, and 40.6, respectively. These levels fell substantially in the last few weeks. However, they have rebounded recently.

On October 4, 2017, the Sprott Gold Miners ETF (SGDM) and the VanEck Vectors Junior Gold Miners ETF (GDXJ) rose 1.0% and 0.82%, respectively.

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